Handling Funds - First of all, all moneys collected for brokerage services from clients or customers must be turned into the Firm within 2 business days and the firm then must deposit the funds by the next banking day. Remember, brokerage services include:
Administration of Funds Held in Trust
Any real estate broker who receives funds or moneys from any principal or any party to a real estate or business opportunity transaction, property management agreement, contract/mortgage collection agreement, or advance fees, shall hold the funds or moneys in trust for the purposes of the brokerage service contract or transaction, and shall not utilize such funds or moneys for the benefit of the broker, managing broker, real estate firm or any person not entitled to such benefit. Designated brokers are responsible for ensuring their affiliated licensees safeguard client funds by following these rules. Funds or moneys received in trust shall be deposited in a bank, savings association, or credit union insured by the Federal Deposit Insurance Corporation or the share insurance fund of the National Credit Union Administration, or any successor federal deposit insurer. The financial institution must be able to accept service in Washington state. The designated broker is responsible for the administration of trust funds and accounts to include, but not be limited to:
Safeguarding Client Funds
Conversion of Client Funds - All licensees including the Firm, & affiliate Brokers shall not utilize client funds for personal use or gain. To utilize client funds is called conversion and illegal. Client funds are to be separated by establishing a Client Trust Account with a financial institution such as a bank.
Trust Accounts - Moneys from clients must be deposited in a bank, savings association, or credit union located in Washington State and insured by the Federal Deposit Insurance Corporation (FDIC) or the share insurance fund of the National Credit Union Administration (NCUA) for credit union accounts; and any successor agency to these entities in the possible future (politics).
Trust Accounts - Designation - The trust account set up by the firm shall show the name of the firm (or assumed name of file) as licensed. The financial institution allowing the trust account must be familiar with trust account requirements. Service fees by the financial institution cannot be charged to the trust account. Only client funds and client expenses can come into or out of the trust account.
Managing a Trust Account - In addition to record keeping, the following are additional requirements in administering a Trust Account. These include:
Voided Checks - Any checks that are voided due to error or any other reason must be retained. They must be permanently deface (blacked out) and retained in the records of the firm.
Commissions Paid - When a commission is owed the firm and some of its affiliate brokers and managing brokers, the money can come out of trust account.* Commissions shared with another firm (the split) are shared from the total commission received by the firm for completion of a transaction.
Escrow - Usually, commissions are taken from the seller's balance sheet upon closing and sent to the listing firm. Those moneys go into the Firm's general account. From their the firm would pay the cooperating firm (the split).
No Disbursements - No moneys shall be paid out of a Trust Account if the funds do not apply to a specific brokerage service transaction. Example: Bank service fees cannot be paid out of the trust account because that disbursement does not apply to a specific transaction.
No Payments to 3rd Parties - No payment of commissions to cooperating brokers or advertisers of client property shall be made from the Trust Account. The Firm and Designated Broker shall take owed commissions from the trust account OR paid by escrow. The Firm puts those commissions into the firm's General (Business) Account.
Office General Account Pays 3rd Parties - Once the Firm and Designated Broker receive the proper commission or fee for services, the Firm then pays commissions to affiliate licensees and 3rd paries by check from the general business checking account of the firm.
Duties of Licensee
Regardless of whether a broker is an agent, the broker owes to all parties to whom the broker renders real estate brokerage services the following duties, which may not be waived:
The State has specific situations regarding practicing professional real estate that applies to all parties that the licensee comes in contact with. These include clients, customers, and those individuals that the licensee is performing as a sub-agent to an agent.
Present all Written Offers
To present all written offers, written notices, and other written communications to and from either party in a timely manner, regardless of whether the property is subject to an existing contract for sale or the buyer is already a party to an existing contract to purchase.
Making such decisions on behalf of their selling client is not their authority to decide. A creative offer might be of interest to the seller. Only the seller can reject offers and it is not up to their brokers to make the determination.
Disclose all Existing Material Facts
To disclose all existing material facts known by the licensee and not apparent or readily ascertainable to a party; provided that this subsection shall not be construed to imply any duty to investigate matters that the licensee has not agreed to investigate.
This specific requirement is utilized numerous times within the Washington Administrative Code as well as the Revised Code of Washington. A material fact is information that would have an effect in the decision-making process of buying and selling by the principles.
Only those material facts that are known to the broker are required to be presented to all parties in a possible transaction. The State underscores that this RCW does not require licensees to do investigative work beyond their current knowledge. The requirement only applies to already known maternal facts of the licensee.
The study of system of rules which a particular country or community recognizes as regulating the actions of its members and which it may enforce by the imposition of penalties.