North Carolina Administrative Code › Title 21 - OCCUPATIONAL LICENSING BOARDS AND COMMISSIONS › Chapter 58 - REAL ESTATE COMMISSION › Subchapter A - REAL ESTATE BROKERS › Section .0100 - GENERAL BROKERAGE › Section 58A .0117 - ACCOUNTING FOR TRUST MONEY

Current through Register Vol. 39, No. 2, July 15, 2024
(a) A broker
				  shall create, maintain and retain records sufficient to identify the ownership
				  of all funds belonging to others. Such records shall be sufficient to show
				  proper deposit and disbursement of such funds into and from a trust or escrow
				  account and to verify the accuracy and proper use of the trust or escrow
				  account.
(b) A trust or escrow
				  account shall satisfy the requirements of
				  G.S.
				  93A-6(g) and shall be
				  designated as a "Trust Account" or "Escrow Account." All bank statements,
				  deposit tickets and checks drawn on said account shall bear the words "Trust
				  Account" or "Escrow Account." A trust account shall provide for the full
				  withdrawal of funds on demand without prior notice and without penalty or
				  deduction to the funds.
(c) A
				  broker shall create, maintain or retain, as required by Rule .0108 of this
				  Section, the following records:
(1) bank
				  statements;
(2) canceled checks and
				  other evidence or memoranda of payments from the trust or escrow account,
				  whether by transfer between accounts, wire payments, or payments by electronic
				  means, that shall be referenced to the corresponding journal entry or check
				  stub entries and to the corresponding sales transaction ledgers or for rental
				  transactions, the corresponding property or owner ledgers. Checks and other
				  evidence or memoranda of payments from the account shall identify the payee by
				  name and shall bear a notation identifying the purpose of the disbursement.
				  When a payment is used to disburse funds for more than one sales transaction,
				  owner, or property, the check or other evidence or memoranda of payment shall
				  bear a notation identifying each sales transaction, owner, or property for
				  which disbursement is made, including the amount disbursed for each, and the
				  corresponding sales transaction, property, or owner ledger entries. When
				  necessary, the check notation may refer to the required information recorded on
				  a supplemental disbursement worksheet that shall be cross-referenced to the
				  corresponding check or payment. In lieu of retaining canceled checks, a broker
				  may retain digitally imaged copies of the canceled checks or substitute checks
				  provided that such images are legible reproductions of the front and back of
				  such instruments with no smaller images than 1.1875 x 3.0 inches and provided
				  that the broker's bank retains for a period of at least five years the original
				  checks, "substitute checks" as described in
				  12 C.F.R.
				  229.51 or the capacity to provide substitute
				  checks as described in 12
				  C.F.R. 229.51 and makes the original or
				  substitute checks available to the broker and the Commission upon request. The
				  description of "substitute checks" contained in
				  12 C.F.R.
				  229.51 is incorporated by referencing,
				  including subsequent amendments and additions. The regulation may be accessed
				  at www.gpo.gov at no charge.
(3)
				  deposit tickets or other evidence or memoranda of deposits or payments into the
				  account, whether by transfer between accounts, wire payments, or payments by
				  electronic means:
(A) for a sales
				  transaction, the deposit ticket or other evidence or memoranda of deposits or
				  payments into the account shall identify the purpose and remitter of the funds
				  deposited, the property, the parties involved, and a reference to the
				  corresponding sales transaction ledger;
(B) for a rental transaction, the deposit
				  ticket or other evidence or memoranda of deposits or payments into the account
				  shall identify the purpose and remitter of the funds deposited, the tenant, and
				  the corresponding property or owner ledger;
(C) for deposits of funds belonging to or
				  collected on behalf of a property owner association, the deposit ticket or
				  other evidence or memoranda of deposits or payments into the account shall
				  identify the property or property interest for which the payment is made, the
				  property or interest owner, the remitter, and the purpose of the
				  payment;
(D) when a single deposit
				  ticket or payment is used to deposit funds collected for more than one sales
				  transaction, property owner, or property, the required information may either
				  be recorded on the ticket or other evidence or memoranda of deposits or
				  payments into the account for each sales transaction, owner, or property, or it
				  may refer to the same information recorded on a supplemental deposit worksheet
				  that shall be cross-referenced to the corresponding deposit ticket;
(4) a separate ledger for each
				  sales transaction, for each property or owner of property managed by the broker
				  and for company funds held in the trust account:
(A) the ledger for a sales transaction shall
				  identify the property, the parties to the transaction, the amount, date, and
				  purpose of the deposits and from whom received, the amount, date, check number,
				  and purpose of disbursements and to whom paid, and the running balance of funds
				  on deposit for each deposit and disbursement entry;
(B) the ledger for a rental transaction shall
				  identify the particular property or owner of property, the tenant, the amount,
				  date, and purpose of the deposits and from whom received, the amount, date,
				  check number, and purpose of disbursements and to whom paid, and the running
				  balance of funds on deposit for each deposit and disbursement entry. Monies
				  held as tenant security deposits in connection with rental transactions may be
				  accounted for on a separate tenant security deposit ledger for each property or
				  owner of property managed by the broker. For each security deposit, the tenant
				  security deposit ledger shall identify the remitter, the date the deposit was
				  paid, the amount, the tenant, landlord, and subject property as well as the
				  check number, amount, date, payee, purpose and a running balance for each
				  disbursement. When tenant security deposit monies are accounted for on a
				  separate ledger as provided in this Rule, deposit tickets, canceled checks and
				  supplemental worksheets shall reference the corresponding tenant security
				  deposit ledger entries;
(C) a
				  broker may maintain a maximum of one hundred dollars ($100.00) in company funds
				  in a trust account for the purpose of paying service charges incurred by the
				  account. In the event that the services charges exceed one hundred dollars
				  ($100.00) monthly, the broker may deposit an amount each month sufficient to
				  cover the service charges. A broker shall maintain a separate ledger for
				  company funds held in the trust account identifying the date, amount and
				  running balance for each deposit and disbursement;
(5) a general journal, check register or
				  check stubs identifying in chronological order each bank deposit and
				  disbursement of monies to and from the trust or escrow account, including the
				  amount and date of each deposit and a reference to the corresponding deposit
				  ticket and any supplemental deposit worksheet, and the amount, date, check
				  number, and purpose of disbursements and to whom paid. The journal or check
				  stubs shall also show a running balance for each entry into the
				  account;
(6) a payment record for
				  each property or interest for which funds are collected and deposited into a
				  property owner association trust account as required by Rule .0118 of this
				  Section. Payment record(s) shall identify the amount, date, remitter, and
				  purpose of payments received, the amount and nature of the obligation for which
				  payments are made, and the amount of any balance due or delinquency;
(7) copies of earnest money checks, due
				  diligence fee checks, receipts for cash payments, contracts, and closing
				  statements in sales transactions;
(8) copies of leases, security deposit
				  checks, property management agreements, property management statements, and
				  receipts for cash payments in leasing transactions;
(9) copies of covenants, bylaws, minutes,
				  management agreements and periodic statements relating to the management of
				  property owner associations;
(10)
				  copies of invoices, bills, and contracts paid from the trust account;
				  and
(11) copies of any documents
				  not otherwise described in this Rule that are necessary to verify and explain
				  record entries.