Date of Adoption: September 23, 2003.
Purpose: Require that real estate licensees obtain receipts for earnest money, deliver all receipts to brokers, and disclose to consumers the risks in depositing earnest money with third party holders.
Citation of Existing Rules Affected by this Order: Amending WAC 308-124E-013(4).
Statutory Authority for Adoption: RCW 18.85.040(1).
Adopted under notice filed as WSR 03-13-024 on June 9, 2003.
Changes Other than Editing from Proposed to Adopted Version: Change reference to "the broker" to "a broker."
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 1, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 1, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 1, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making:
Pilot Rule Making:
or Other Alternative Rule Making:
Effective Date of Rule: Thirty-one days after filing.
October 6, 2003
Sydney W. Beckett
Acting Assistant Director
AMENDATORY SECTION(Amending WSR 00-08-035, filed 3/29/00, effective 7/1/00)
WAC 308-124E-013 Administration of funds held in trust -- Real estate and business opportunity transactions. The procedures in this section are applicable to funds received by the broker in connection with real estate sales or business opportunity transactions or options thereon. These procedures are in addition to the requirements of the general trust account procedures contained in WAC 308-124E-012.
(1) Bank accounts shall be designated as trust accounts in the firm or DBA name of the real estate broker as licensed. Trust bank accounts for real estate sales or business opportunity transactions shall be interest bearing demand deposit accounts. These accounts shall be established as described in RCW 18.85.310 and this section.
(a) The broker shall maintain a pooled interest bearing trust account identified as housing trust fund account for deposit of trust funds which are ten thousand dollars or less.
Interest income from this account will be paid to the department by the depository institution in accordance with RCW 18.85.310(7) after deduction of reasonable bank service charges and fees, which shall not include check printing fees or fees for bookkeeping systems. The department shall remit the funds to the state treasurer.
(b) The agent shall disclose in writing to the party depositing more than ten thousand dollars that the party has an option between (i) and (ii) below;
(i) All trust funds not required to be deposited in the account specified in (a) of this subsection shall be deposited in a separate interest-bearing trust account for the particular party or party's matter on which the interest will be paid to the party(ies); or
(ii) In the pooled interest-bearing account specified in (a) of this subsection if the parties to the transaction agree in writing.
(c)(i) For accounts established as specified in (a) of this subsection, the broker will maintain an additional ledger card with the heading identified as "Housing trust account interest." As the monthly bank statements are received, indicating interest credited, the broker will post the amount to the pooled interest ledger card. When the bank statement indicates that the interest was paid to the state or bank fees were charged, the broker will debit the ledger card accordingly.
(ii) For accounts established as specified in (b)(i) of this subsection, the interest earned or bank fees charged will be posted to the individual ledger card.
(d) When the bank charges/fees exceed the interest earned, causing the balance to be less than trust account liability, the broker shall within one banking day after receipt of such notice, deposit funds from the brokers business account or other non-trust account to bring the trust account into balance with outstanding liability. The broker may be reimbursed by the party depositing the funds for these charges for accounts established as specified in (b)(i) of this subsection, if the reimbursement is authorized in writing by the party depositing the funds. For accounts established under (a) of this subsection, the broker will absorb the excess bank charges/fees as a business expense.
(2) A separate check shall be drawn on the real estate trust bank account, payable to the broker as licensed, for each commission earned, after the final closing of the real estate or business opportunity transaction. Each commission check shall be identified to the transaction to which it applies.
(3) No disbursements from the real estate trust bank account shall be made in advance of closing of a real estate or business opportunity transaction or before the happening of a condition set forth in the earnest money agreement, to any person or for any reason, without a written release from both the purchaser and seller; except that
(i) If the agreement terminates according to its own terms prior to closing, disbursement of funds shall be made as provided by the agreement without a written release; and
(ii) Funds may be disbursed to the escrow agent designated in writing by the purchaser and seller to close the transaction, reasonably prior to the date of closing in order to permit checks to clear.
(4) When a transaction provides for the earnest money
deposit/note or other instrument to be held by a party other
than the broker, ((
the)) a broker shall deliver the deposit to
the party designated to hold the funds(( , unless the parties
to the transaction instruct otherwise in writing)). The
delivery shall be made within one banking day after all
parties to the transaction have signed the agreement, unless
parties to the transaction instruct otherwise in writing. A
dated receipt will be obtained and placed in the transaction
[Statutory Authority: RCW 18.85.040 and The Governor's Order on Regulatory Improvement 97-02. 00-08-035, § 308-124E-013, filed 3/29/00, effective 7/1/00. Statutory Authority: RCW 18.85.040. 91-23-006, § 308-124E-013, filed 11/7/91, effective 12/8/91; 90-23-039, § 308-124E-013, filed 11/15/90, effective 12/16/90; 88-20-037 (Order PM 775), § 308-124E-013, filed 9/30/88. Statutory Authority: RCW 18.85.310. 88-16-102 (Order 755), § 308-124E-013, filed 8/3/88; 88-06-040 (Order PM 712), § 308-124E-013, filed 3/1/88.]