AN ACT Relating to real estate brokers; and adding new sections to chapter 18.85 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 18.85 RCW to read as follows:

Any real estate broker who receives funds or money from any principal or any party to a real estate transaction shall hold the funds or moneys in trust for the purposes of the transaction or agreement, and shall not utilize such funds or moneys for the benefit of the broker or any person not entitled to such benefit. Funds or moneys received in trust by a broker shall be deposited in an interest-bearing trust account in any bank, credit union, or savings and loan association, selected by a broker in the exercise of ordinary prudence, authorized by federal or state law to do business in Washington and insured by the federal deposit insurance corporation, the national credit union share insurance funds, the Washington credit union share guaranty association, or the federal savings and loan insurance corporation, or which is a "qualified public depository" as defined in RCW 39.58.010(1). Interest-bearing trust funds shall be placed in accounts in which withdrawals or transfer can be made without delay when such funds are required, subject only to any notice period which the depository institution is required to reserve by law or regulation.

(1) Every broker that receives funds or moneys in trust shall establish and maintain a pooled interest-bearing trust account and shall deposit therein all funds held or received in trust by such broker, except "all funds" for purposes of this section shall not be deemed to include the following funds: (a) Separate property management trust accounts which may be either pooled funds or separate individual owner accounts, and which can include damage and/or security deposits accounts; (b) individual interest-bearing trust accounts established by the broker for individual transactions pursuant to regulations adopted by the department of licensing; or (c) any other separate trust account established by the broker pursuant to applicable laws and regulations. The interest accruing on this account, less any transaction costs, shall be paid to the real estate foundation of Washington, as established under this chapter. The broker shall be required to notify the party of the intended use of such funds and of the party's right to have a separate fund opened in the party's name if the amount of funds received from any party for deposit in a real estate transaction is equal to or greater than ten thousand dollars. Otherwise, the broker is not required to notify the party of the intended use of such funds or of the parties' right to have a separate account.

(2) The bank, credit union, or savings and loan association maintaining the pooled-bearing trust account for the broker shall comply with the following:

(a) Notify promptly the director of licensing and the real estate foundation of Washington of the name of each broker that opens such trust account and the number as signed to that account;

(b) Remit quarterly the interest or dividends on such account, less any service charges reasonably related to the maintenance of such account, to the real estate foundation of Washington; and

(c) Transmit with each remittance to the real estate foundation of Washington a statement showing the name and account number of the broker for which the remittance is sent, the rate of interest applied, and the amount of service charges, if any, and the account balance(s) of the period for which remittance is made. A copy of such statement shall be transmitted to the depositing broker.

NEW SECTION. Sec. 2. A new section is added to chapter 18.85 RCW to read as follows:

There is created the broker's trust account board to consist of seven members to be selected as follows:

(1) The governor shall appoint six members with at least two residing east of the Cascade range of mountains. The governor may review nominations from the Washington association of realtors, private, nonprofit housing assistance programs, and any state-wide association of public housing authorities. At least two of these appointments shall be real estate brokers or salespersons licensed under chapter 18.85 RCW.

(2) The real estate commission, created under this chapter, shall appoint one member. Members shall serve for terms of three years expiring on January 15th: PROVIDED HOWEVER, That of the first members appointed by the governor and the Washington association of realtors, one of each shall be appointed for a term of one year, one of each for a term of two years, and one of each for a term of three years. Any vacancy occurring in the membership of the board shall be filled for the remainder of the unexpired term by the individual or entity responsible for the original appointment. Members shall serve without compensation.

NEW SECTION. Sec. 3. A new section is added to chapter 18.85 RCW to read as follows:

(1) The members of the broker's trust account board are empowered to form a nonprofit corporation called the real estate foundation of Washington under the provisions of chapter 24.03 RCW. The brokers trust account board, through the foundation, shall assist development and financing of low-income housing and provide support for real estate-related charitable and educational purposes within the meaning of section 501(c)(3) of the Internal Revenue Code of 1954. The directors of the foundation shall be directors as long as they are members of the board or until their successors are appointed and qualified. Directors of the foundation shall serve without compensation but may be reimbursed for necessary travel and other expenses incurred in the performance of their duties as foundation directors.

(2) For the purposes of this section "low-income housing" means housing assistance for persons or families with incomes at or below fifty percent of the median income for the county or standard metropolitan statistical area of residence.

(3) The real estate foundation of Washington shall have as its sole charitable and educational purpose the financing and development of low-income housing and real estate-related charitable and educational purposes within the meaning of section 501(c)(3) of the Internal Revenue Code of 1954. The foundation's funds shall not be deemed public funds, and the foundation shall not be deemed a state agency. The foundation shall file an annual report with the governor.

(4) The foundation shall conduct its affairs as if it were a governmental entity subject to the requirements of the open public meetings act, chapter 42.30 RCW, and RCW 42.17.250 through 42.17.340: PROVIDED, That financial or other information relating to individual brokers shall not be subject to such requirements.