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Rule Title: TRUST ACCOUNT REQUIREMENTS
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Department: LABOR AND INDUSTRY
Chapter: BOARD OF REALTY REGULATION
Subchapter: General Provisions
 
Latest version of the adopted rule presented in Administrative Rules of Montana (ARM):

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24.210.426    TRUST ACCOUNT REQUIREMENTS

(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.

(4) The board is authorized to examine each broker's trust account and related real estate documents. Such examination will be conducted by a board representative and will be at such time as the board representative may request during normal business hours. The broker is required to fully cooperate with the board representative.

 

History: 37-1-131, 37-1-319, 37-51-203, MCA; IMP, 37-1-131, 37-1-319, 37-51-313, 37-51-321, 37-51-324, 37-51-503, MCA; Eff. 12/31/72; AMD, Eff. 4/4/74; AMD, Eff. 7/5/76; TRANS, from Dept. of Prof. & Occup. Lic., Ch. 274, L. 1981, Eff. 7/1/81; AMD, 1981 MAR p. 1613, Eff. 11/26/81; AMD, 1982 MAR p. 1199, Eff. 6/18/82; AMD, 1990 MAR p. 1156, Eff. 6/15/90; AMD, 1993 MAR p. 1909, Eff. 8/13/93; AMD, 1995 MAR p. 2397, Eff. 11/10/95; AMD, 1999 MAR p. 405, Eff. 3/12/99; AMD, 2002 MAR p. 2905, Eff. 10/18/02; TRANS, from Commerce, 2005 MAR p. 2455; AMD, 2007 MAR p. 1329, Eff. 9/7/07; AMD, 2012 MAR p. 1776, Eff. 9/7/12; AMD, 2013 MAR p. 1621, Eff. 9/6/13; AMD, 2018 MAR p. 1163, Eff. 6/23/18.


 

 
MAR Notices Effective From Effective To History Notes
24-210-44 6/23/2018 Current History: 37-1-131, 37-1-319, 37-51-203, MCA; IMP, 37-1-131, 37-1-319, 37-51-313, 37-51-321, 37-51-324, 37-51-503, MCA; Eff. 12/31/72; AMD, Eff. 4/4/74; AMD, Eff. 7/5/76; TRANS, from Dept. of Prof. & Occup. Lic., Ch. 274, L. 1981, Eff. 7/1/81; AMD, 1981 MAR p. 1613, Eff. 11/26/81; AMD, 1982 MAR p. 1199, Eff. 6/18/82; AMD, 1990 MAR p. 1156, Eff. 6/15/90; AMD, 1993 MAR p. 1909, Eff. 8/13/93; AMD, 1995 MAR p. 2397, Eff. 11/10/95; AMD, 1999 MAR p. 405, Eff. 3/12/99; AMD, 2002 MAR p. 2905, Eff. 10/18/02; TRANS, from Commerce, 2005 MAR p. 2455; AMD, 2007 MAR p. 1329, Eff. 9/7/07; AMD, 2012 MAR p. 1776, Eff. 9/7/12; AMD, 2013 MAR p. 1621, Eff. 9/6/13; AMD, 2018 MAR p. 1163, Eff. 6/23/18.
24-210-38 9/6/2013 6/23/2018 History: 37-1-131, 37-1-319, 37-51-203, MCA; IMP, 37-1-316, 37-1-319, 37-51-202, 37-51-313, 37-51-321, 37-51-324, 37-51-503, MCA; Eff. 12/31/72; AMD, Eff. 4/4/74; AMD, Eff. 7/5/76; TRANS, from Dept. of Prof. & Occup. Lic., Ch. 274, L. 1981, Eff. 7/1/81; AMD, 1981 MAR p. 1613, Eff. 11/26/81; AMD, 1982 MAR p. 1199, Eff. 6/18/82; AMD, 1990 MAR p. 1156, Eff. 6/15/90; AMD, 1993 MAR p. 1909, Eff. 8/13/93; AMD, 1995 MAR p. 2397, Eff. 11/10/95; AMD, 1999 MAR p. 405, Eff. 3/12/99; AMD, 2002 MAR p. 2905, Eff. 10/18/02; TRANS, from Commerce, 2005 MAR p. 2455; AMD, 2007 MAR p. 1329, Eff. 9/7/07; AMD, 2012 MAR p. 1776, Eff. 9/7/12; AMD, 2013 MAR p. 1621, Eff. 9/6/13.
24-210-37 9/7/2012 9/6/2013 History: 37-1-131, 37-1-319, 37-51-203, MCA; IMP, 37-1-316, 37-1-319, 37-51-202, 37-51-313, 37-51-321, 37-51-324, 37-51-503, MCA; Eff. 12/31/72; AMD, Eff. 4/4/74; AMD, Eff. 7/5/76; TRANS, from Dept. of Prof. & Occup. Lic., Ch. 274, L. 1981, Eff. 7/1/81; AMD, 1981 MAR p. 1613, Eff. 11/26/81; AMD, 1982 MAR p. 1199, Eff. 6/18/82; AMD, 1990 MAR p. 1156, Eff. 6/15/90; AMD, 1993 MAR p. 1909, Eff. 8/13/93; AMD, 1995 MAR p. 2397, Eff. 11/10/95; AMD, 1999 MAR p. 405, Eff. 3/12/99; AMD, 2002 MAR p. 2905, Eff. 10/18/02; TRANS, from Commerce, 2005 MAR p. 2455; AMD, 2007 MAR p. 1329, Eff. 9/7/07; AMD, 2012 MAR p. 1776, Eff. 9/7/12.
9/7/2007 9/7/2012 History: 37-1-131, 37-1-319, 37-51-203, MCA; IMP, 37-1-316, 37-1-319, 37-51-202, 37-51-313, 37-51-321, MCA; Eff. 12/31/72; AMD, Eff. 4/4/74; AMD, Eff. 7/5/76; TRANS, from Dept. of Prof.& Occup. Lic., Ch. 274, L. 1981, Eff. 7/1/81; AMD, 1981 MAR p. 1613, Eff. 11/26/81; AMD, 1982 MAR p. 1199, Eff. 6/18/82; AMD, 1990 MAR p. 1156, Eff. 6/15/90; AMD, 1993 MAR p. 1909, Eff. 8/13/93; AMD, 1995 MAR p. 2397, Eff. 11/10/95; AMD, 1999 MAR p. 405, Eff. 3/12/99; AMD, 2002 MAR p. 2905, Eff. 10/18/02; TRANS, from Commerce, 2005 MAR p. 2455; AMD, 2007 MAR p. 1329, Eff. 9/7/07.
10/18/2002 9/7/2007 History: 37-1-131, 37-1-316, 37-51-203, MCA; IMP, 37-1-316, 37-1-319, 37-51-202, 37-51-203, 37-51-321, MCA; Eff. 12/31/72; AMD, Eff. 4/4/74; AMD, Eff. 7/5/76; TRANS, from Dept. of Prof. & Occup. Lic. , Ch. 274, L. 1981, Eff. 7/1/81; AMD, 1981 MAR p. 1613, Eff. 11/26/81; AMD, 1982 MAR p. 1199, Eff. 6/18/82; AMD, 1990 MAR p. 1156, Eff. 6/15/90; AMD, 1993 MAR p. 1909, Eff. 8/13/93; AMD, 1995 MAR p. 2397, Eff. 11/10/95; AMD, 1999 MAR p. 405, Eff. 3/12/99; AMD, 2002 MAR p. 2905, Eff. 10/18/02; TRANS, from Commerce, 2005 MAR p. 2455.
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