AN ACT Relating to the housing trust fund; amending RCW 43.185.020, 43.185.030, 18.85.310, 59.18.270, 67.70.190, and 67.70.240; adding a new section to chapter 43.185 RCW; and making an appropriation.

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

Sec. 1. Section 3, chapter 298, Laws of 1986 and RCW 43.185.020 are each amended to read as follows:

(1) "Department" means the department of community development.

(2) "Director" means the director of the department of community development.

(3) "Very low income" means individuals or households with incomes at or below fifty percent of the median income for the county or standard metropolitan statistical area of residence.

Sec. 2. Section 2, chapter 298, Laws of 1986 and RCW 43.185.030 are each amended to read as follows:

There is hereby created a fund in the office of the treasurer known as the Washington housing trust fund. ((~~The treasurer shall serve as the trustee thereof and shall make disbursements therefrom as directed by this chapter.~~)) The housing trust fund shall include revenue from the sources established by this chapter, appropriations by the legislature, private contributions, and all other sources. Eighty percent of the return on the fund in the form of investment income or interest shall be added to the principal of the fund. The remaining twenty percent shall be placed in the general fund.

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

The director shall promptly appoint a low income housing assistance advisory committee composed of a representative from each of the following groups: Apartment owners, mobile home park owners, realtors, mortgage lending or servicing institutions, private nonprofit housing assistance programs, tenant associations, and public housing assistance programs. The advisory group shall advise the director on housing needs in this state, operational aspects of the grant and loan program or revenue collection programs established by this chapter, and implementation of the policy and goals of this chapter.

Sec. 4. 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 by 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 utilized 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) As to accounts created under subsection (5) of this section, agents 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 a statement showing the name of the person or entity for whom the remittance is sent, 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.

The director shall forward a copy of these reports to the department of licensing to aid in the enforcement of the requirements of this section.

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.

The provisions of this section shall not relieve any real estate broker from any obligation with respect to the safekeeping of clients' funds.

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. 5. 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.~~)) In the case of landlords who maintain ten or fewer residential rental units within the state the landlord shall be entitled to receipt of the interest paid on such trust account deposits unless otherwise agreed in writing. All other landlords shall direct the depository institution to pay the interest on such trust accounts to the state treasurer to be placed in the housing trust fund established by 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.

Sec. 6. Section 19, chapter 7, Laws of 1982 2nd ex. sess. and RCW 67.70.190 are each amended to read as follows:

Unclaimed prizes shall be retained in the state lottery ((~~fund~~)) account for the person entitled thereto for one hundred eighty days after the drawing in which the prize is won. If no claim is made for the prize within this time, the prize shall be ((~~retained in the state lottery fund for further use as prizes~~)) placed in the housing trust fund established by RCW 43.185.030 and all rights to the prize shall be extinguished.

Sec. 7. Section 24, chapter 7, Laws of 1982 2nd ex. sess. as amended by section 5, chapter 375, Laws of 1985 and RCW 67.70.240 are each amended to read as follows:

The moneys in the state lottery account shall be used only: (1) For the payment of prizes to the holders of winning lottery tickets or shares; (2) for purposes of making deposits into the reserve account created by RCW 67.70.250 and into the lottery administrative account created by RCW 67.70.260; (3) for purposes of making deposits into the state's general fund; (4) for the purpose of making deposits into the housing trust fund under the provisions of section 6 of this 1987 act; (5) for the purchase and promotion of lottery games and game-related services; and ((~~(5)~~)) (6) for the payment of agent compensation.

The office of financial management shall require the allotment of all expenses paid from the account and shall report to the ways and means committees of the senate and house of representatives any changes in the allotments.

NEW SECTION. Sec. 8. There is hereby appropriated from the housing trust fund to the department of community development for the biennium ending June 30, 1989, the sum of four million five hundred thousand dollars, or so much thereof as shall be necessary, to implement the purposes of chapter 43.185 RCW.