AN ACT Relating to funding the Washington housing trust fund; amending RCW 18.85.310 and 59.18.270; adding a new section to chapter 43.185 RCW; and providing an effective date.

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

Sec. 1. Section 19, chapter 222, Laws of 1951 as last amended by section 44, chapter 52, Laws of 1957 and RCW 18.85.310 are each amended to read as follows:

(1) Every licensed real estate broker shall keep adequate records of all real estate transactions handled by or through him. The records shall include, but are not limited to, a copy of the earnest money receipt, and an itemization of the broker's receipts and disbursements with each transaction. These records and all other records hereinafter specified shall be open to inspection by the director or his authorized representatives.

(2) Every real estate broker shall also deliver or cause to be delivered to all parties signing the same, at the time of signing, conformed copies of all earnest money receipts, listing agreements and all other like or similar instruments signed by the parties, including the closing statement.

(3) Every real estate broker shall also keep separate real estate fund accounts in a recognized Washington state depositary authorized to receive funds in which shall be kept separate and apart and physically segregated from licensee broker's own funds, all funds or moneys of clients which are being held by such licensee broker pending the closing of a real estate sale or transaction, or which have been collected for said client and are being held for disbursement for or to said client and such funds shall be deposited not later than the first banking day following receipt thereof.

(4) Separate accounts comprised of clients' funds required to be maintained under this section shall be interest-bearing accounts from which withdrawals or transfers can be made without delay, subject only to the notice period which the depository institution is required to reserve by law or regulation.

(5) Every real estate broker shall maintain a pooled interest-bearing escrow account for deposit of client funds that are nominal in amount or expected to be held for a short period of time. The interest accruing on this account, net of any reasonable transaction costs, shall be paid to the state treasurer for deposit in the Washington housing trust fund created in RCW 43.185.030. An agent may, but shall not be required to, notify the client of the intended use of such funds.

(6) All client funds shall be deposited in the account specified in subsection (5) of this section unless they are deposited in:

(a) A separate interest-bearing trust account for the particular client or client's matter on which the interest will be paid to the client; or

(b) A pooled interest-bearing trust account with subaccounting that will provide for computation of interest earned by each client's funds and the payment thereof to the client.

(7) In determining whether to use the account specified in subsection (5) of this section or an account specified in subsection (6) of this section, an agent shall consider only whether the funds to be invested could be used to provide a positive net return to the client, as determined by taking into consideration the following factors:

(a) The amount of interest that the funds would earn during the period they are expected to be deposited;

(b) The cost of establishing and administering the account, including the cost of the real estate broker's services; and

(8) For an account created under subsection (5) of this section, an agent shall direct the depository institution to:

(a) Remit interest or dividends, net of any reasonable service charges or fees, on the average monthly balance in the account, or as otherwise computed in accordance with an institution's standard accounting practice, at least quarterly, to the state treasurer for deposit in the housing trust fund created by RCW 43.185.030; and

(b) Transmit to the director of community development a statement showing the name of the person or entity for whom the remittance is spent, the rate of interest applied, and the amount of service charges deducted, if any, and the account balance(s) of the period in which the report is made, with a copy of such statement to be transmitted to the depositing person or firm.

(9) The director shall forward a copy of the reports required by subsection (8) of this section to the department of licensing to aid in the enforcement of the requirements of this section.

(10) This section does not relieve any real estate broker from any obligation with respect to the safekeeping of clients' funds.

(11) Any violation by a real estate broker of any of the provisions of this section, or RCW 18.85.230, shall be grounds for revocation of the licenses issued to the broker.

Sec. 2. Section 27, chapter 207, Laws of 1973 1st ex. sess. as amended by section 1, chapter 233, Laws of 1975 1st ex.sess. and RCW 59.18.270 are each amended to read as follows:

All moneys paid to the landlord by the tenant as a deposit as security for performance of the tenant's obligations in a lease or rental agreement shall promptly be deposited by the landlord in a trust account, maintained by the landlord for the purpose of holding such security deposits for tenants of the landlord, in a bank, savings and loan association, mutual savings bank, or licensed escrow agent located in Washington. ((~~Unless otherwise agreed in writing, the landlord shall be entitled to receipt of interest paid on such trust account deposits.~~)) If a landlord maintains ten or fewer residential rental units within the state, the landlord is entitled to receipt of the interest paid on the trust account deposits unless otherwise agreed in writing. A landlord who maintains more than ten residential rental units within the state shall direct the depository institution to pay the interest on the trust account deposits to the state treasurer to be placed in the housing trust fund established in RCW 43.185.030. The landlord shall provide the tenant with a written receipt for the deposit and shall provide written notice of the name and address and location of the depository and any subsequent change thereof. If during a tenancy the status of landlord is transferred to another, any sums in the deposit trust account affected by such transfer shall simultaneously be transferred to an equivalent trust account of the successor landlord, and the successor landlord shall promptly notify the tenant of the transfer and of the name, address and location of the new depository. The tenant's claim to any moneys paid under this section shall be prior to that of any creditor of the landlord, including a trustee in bankruptcy or receiver, even if such moneys are commingled.

NEW SECTION. Sec. 3. A new section is added to chapter 43.185 RCW to read as follows:

The director shall prepare an annual report to the legislature that summarizes the housing trust fund's income, grants and operating expenses, implementation of its program, and any problems arising in the administration thereof.

NEW SECTION. Sec. 4. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 5. This act shall take effect January 1, 1988.