Administrative Rules of Montana › Department 24 - LABOR AND INDUSTRY › Chapter 24.210 - BOARD OF REALTY REGULATION › Subchapter 24.210.4 - General Provisions › Rule 24.210.426 - TRUST ACCOUNT REQUIREMENTS

Current through Register Vol. 13, July 5, 2024
(1) A broker is
				responsible at all times for the proper handling of earnest money, security
				deposits, or other funds received by a broker, a broker's salesperson, or funds
				received by a broker as a designated broker pursuant to (3)(c) on behalf of
				customers or clients. Brokers who have delegated authority for maintenance of a
				trust account are required to review the records maintained by the designated
				broker to ensure compliance with these rules.
(2) All licensees shall ensure that all trust
				funds which the licensee receives are deposited in the broker's trust account
				or are delivered to the designated holder of the funds within three business
				days of receipt of the money, unless otherwise agreed to by the parties. If
				funds are delivered to a third party, the licensee must obtain documentation of
				receipt by the third party. The licensee must maintain the documentation of the
				delivery of the funds in the same manner as trust account records.
(3) If a broker elects to hold trust funds,
				the broker must comply with the following:
(a)
				Offices or firms having more than one broker may utilize a single trust
				account;
(b) A broker may maintain
				more than one trust account, but each trust account must be maintained
				separately;
(c) A broker may
				delegate authority for maintenance of a trust account to a designated broker
				with whom the broker is employed or associated. Delegation shall not relieve
				either broker from responsibility for any failure to comply with these trust
				account requirements whether by the delegating broker or the designated
				broker;
(d) All monies belonging to
				others and accepted by the broker while acting in the capacity as a broker
				shall be deposited in an insured account at an institution located in Montana
				and identified by the words "trust account." Trust funds must be liquid and may
				not be maintained in sweep accounts, invested in certificates of deposit or
				repurchase agreements, or any other method which places trust funds at risk.
				The broker must account for trust funds at all times;
(e) Trust funds may be maintained in
				interest-bearing accounts with the interest payable to the broker, principal,
				third-party, or any other person, as may be designated by written agreement.
				Interest payable to the broker shall be identified by written agreement as
				consideration for services performed and will be considered personal funds
				unless otherwise designated;
(f)
				Trust funds shall be retained in this trust account until the transaction
				involved is closed or terminated; however, trust funds may be disbursed to the
				closing agent in anticipation of closing upon written agreement of the buyers
				and sellers;
(g) At the client's
				written instructions, trust funds which would otherwise be due and payable from
				a trust account may be retained in the trust account although there is no
				purchase, lease, or rental agreement in existence, or when the transaction has
				been terminated;
(h) Money held in
				the trust account, which is due and payable to the broker, must be withdrawn
				within ten business days after such money becomes due and payable to the
				broker. Money not withdrawn from the trust account within the ten business days
				is subject to the personal funds limitations. However, the money may not be
				withdrawn until the financial institution has indicated that deposit has been
				verified and the funds are available;
(i) A broker shall not be entitled to any
				part of the earnest money or other monies paid to the broker in connection with
				any real estate transaction as part or all of the commission or fee until the
				transaction has been closed or terminated. If there is a division of forfeited
				earnest money between the broker and seller, it shall be pursuant to a written
				agreement between them;
(j) No
				payments of personal indebtedness shall be made from a trust account or trust
				funds;
(k) The broker will not be
				disciplined for a negative account or ledger balance that occurs only as the
				result of a deposit that was dishonored after the financial institution had
				indicated the funds were available;
(l) Maintenance of each individual trust
				account shall include the broker or designated broker, keeping at the broker or
				designated broker's office, a complete record of all funds received and
				disbursed in the following manner:
(i) proof
				of deposit showing the date of deposit or electronic transfer, amount, source
				of the money, and where deposited;
(ii) monthly bank statements are to be
				retained and kept on file;
(iii)
				disbursement of trust funds shall be made by either check or electronic
				transfer. If checks are used, trust account checks shall be numbered and all
				voided checks recorded. The checks shall denote the broker's business name and
				address, and must be designated as "trust account";
(iv) a record which shows the chronological
				sequence in which funds are received and disbursed;
(v) for funds received, the record must
				include the date the funds are deposited, the name of the party who is giving
				the money, the name of the principal, and the amount;
(vi) for disbursements, the record must
				include the date the funds are disbursed, the name of the payee, the name of
				the principal, and the amount;
(vii) no disbursement from the trust account
				shall be made until the deposit has been verified; and
(viii) a running balance must be shown after
				each entry;
(m) A
				chronological record shall be kept to show the receipts and the disbursements
				as they affect a single, particular transaction. The record must include the
				names of the parties to a transaction, the date, and the amounts received. When
				disbursing funds, the date, payee, and amount must be shown. A running balance
				must be shown after each entry;
(n)
				The trust account must be reconciled monthly;
(o) A salesperson or a broker who has
				delegated the broker's obligation to maintain a trust account to a designated
				broker pursuant to (c), shall place all funds for deposit in the custody of the
				supervising or designated broker in adequate time for the supervising or
				designated broker to comply with all trust account requirements;
(p) A broker may deposit and keep a sum not
				to exceed $1000 of broker's personal funds in the trust account, which sum
				includes any interest earned on the trust account if the trust account is
				maintained in an interest-bearing account and the interest accrues to the
				broker;
(i) personal funds may be distributed
				for trust account bank charges, related trust account maintenance expenses, and
				when due and payable to the property manager; and
(ii) if personal funds are held in the trust
				account, a chronological ledger must be kept showing all deposits and
				disbursements of personal funds. The record entries must clearly identify the
				parties to a transaction, the dates, and the amounts received. When depositing
				funds, the date of the deposit, the source of funds, and the amount must be
				shown. When disbursing funds, the date of the disbursement, the name of the
				payee, and the amount must be shown. A running balance must be shown after each
				entry;
(q) Funds
				deposited in a trust account in connection with a real estate transaction shall
				not be commingled with the broker's personal funds or other funds in the trust
				account; and
(r) All required trust
				account records may be maintained electronically, but must be maintained in a
				manner that permits auditing.