Alabama Administrative Code › Title 790 - ALABAMA REAL ESTATE COMMISSION › Chapter 790-X-3 - DISCIPLINARY ACTIONS › Section 790-X-3-.03 - Deposit Of Funds

Current through Register Vol. 42, No. 9, June 28, 2024
(1) The
			 deposit and accounting for at all times of all funds belonging to or being held
			 for others in a separate federally insured account or accounts in a financial
			 institution located in Alabama shall require that the qualifying broker be a
			 customer of the financial institution holding all such accounts and the
			 qualifying broker shall be one of the persons with authority to deposit and
			 withdraw funds and to write or make checks as necessary on all such
			 accounts.
(2) Each real estate
			 salesperson or associate broker shall pay over to his or her qualifying broker
			 all funds coming into his or her possession in trust for other parties
			 immediately upon receipt of same.
(3) Each qualifying broker is responsible for
			 deposit of all funds belonging to others coming into his or her possession or
			 of a salesperson or associate broker licensed under him or her where such funds
			 are to be held in trust, unless the qualifying broker is expressly relieved of
			 such responsibility in writing. In cases where the funds are U. S. currency,
			 i.e. cash as opposed to a check or note, these funds shall be deposited
			 immediately. In cases where a check is received as earnest money and the
			 contract form states that the check is to be held for a specific length of time
			 or until the occurrence of a specific event, then the check shall be deposited
			 when the contract form states, or if no time for deposit is specified in the
			 contract form, then the check shall be deposited when the offer becomes a
			 contract.
(4) Funds to be held in
			 trust under a contract for sale involving more than one qualifying broker shall
			 be held and deposited by any of the qualifying brokers involved in the sale.
			 All funds to be held in trust, whether by contract for sale, or by lease or
			 property management agreement, shall be held and deposited by the qualifying
			 broker who is providing these services to the owner. In cases where a successor
			 qualifying broker is to provide these services, the first broker shall provide
			 a complete accounting of the funds and shall transfer the funds to the
			 successor broker. The qualifying broker who is currently providing services to
			 the owner shall be responsible to the public and to the commission for all
			 funds. Upon request by the Commission or its authorized representative, each
			 qualifying broker shall promptly account for any trust funds being held by that
			 qualifying broker.
(5) Disbursement
			 of funds held in trust: Unless otherwise states in this rule, each qualifying
			 broker shall promptly disburse to the appropriate party or parties any trust
			 funds within 7 business days of the consummation of the transaction for which
			 the funds were deposited. If for any reason the transaction is not consummated,
			 or if for any reason there is a disagreement involving to whom trust funds
			 should be disbursed, the qualifying broker shall not disburse any trust funds
			 except pursuant to a written agreement signed by all parties or pursuant to a
			 court order.
(6) Disbursement of
			 security deposits held in trust under a lease agreement:
(a) Residential leases security deposits:
			 Refer to
Code of Ala. 1975
, Section 35-9 A-201
			 Security Deposits; Prepaid Rent, and
			 35-9A-205
			 Limitation of Liability.
Code of Ala. 1975
, Sections
			 35-9 A-201 and
			 35-9A-205
			 have priority and qualifying brokers shall comply with their
			 instruction.
(b) Commercial leases
			 security deposits:
1. Upon termination of the
			 tenancy, money held for the landlord by a qualifying broker as security may be
			 applied to the payment of accrued rent and the amount of damages that the
			 landlord has suffered by reason of the tenant's noncompliance of the lease all
			 as itemized by the qualifying broker in a written notice delivered to the
			 tenant together with the amount due within 60 calendar days after termination
			 of the tenancy and delivery of possession.
2. If the qualifying broker does not refund
			 the entire deposit, the qualifying broker, within the 60 calendar day period,
			 shall provide the tenant an itemized list of amounts withheld.
3. Upon vacating the premises, the tenant may
			 provide to the qualifying broker a valid forwarding address, in writing, to
			 which the deposit or itemized accounting, or both, may be mailed. If the tenant
			 fails to provide a valid forwarding address, the qualifying broker shall mail,
			 by first class mail, the deposit or itemized accounting or both, to the tenant
			 at the address of the property. Any deposit unclaimed by the tenant as well as
			 any check outstanding shall be forfeited by the tenant after a period of 90
			 calendar days.
4. The qualifying
			 broker's mailing, by first class mail, to the address provided in writing by
			 the tenant, within 60 calendar days of the refund or itemized accounting, or
			 both, is sufficient compliance with this chapter.
(c) Security deposits and trust funds subject
			 to a management termination by a landlord or the qualifying broker: If a
			 landlord and/or qualifying broker terminates a management agreement for leased
			 properties, the qualifying broker shall provide an accounting of all security
			 deposits, prepaid rents and other related escrows, and provide such accounting
			 to the landlord or new manager of the property, within seven (7) business days
			 of the management termination effective date, along with payment of funds. A
			 qualifying broker, who is the manager of leased properties, whose leases
			 include security deposits, is relieved of liability under the lease agreements
			 and this chapter as to events occurring after written notice to the tenant of
			 the termination of management and name of the new management.
(d) Security deposits subject to a sale of
			 the property: If a landlord conveys property subject to a rental agreement in a
			 good faith sale to a bona fide purchaser, the qualifying broker shall provide
			 an accounting of all security deposits, prepaid rents and other related
			 escrows, and provide such accounting to the purchaser, within seven (7)
			 business days of the closing of the sale, along with the payment of funds, if
			 such funds are not already transferred via sale closing documents. Upon the
			 date of accounting and payment, the qualifying broker is relieved of trust
			 funds liability under the rental agreement and this chapter as to events
			 occurring after written notice to the tenant of the sale and name of the new
			 management.