(1) Each broker shall maintain a separate bank account which shall be designated a trust account wherein all downpayments, earnest money deposits, rent payments, security deposits or other trust funds received by the broker or his salesperson on behalf of a principal, third-party or any other person shall be deposited. However, a broker does not need to maintain a trust account if:

(a) The broker does not receive down payments, earnest money deposits, rent payments, security deposits or other trust funds on behalf of a principal, third-party or any other person;

(b) The broker elects to use a title company to hold all down payments, earnest money deposits, rent payments, security deposits or other trust funds received from principals, third-parties or other persons; or

(c) The broker has delegated the authority for maintenance of a trust account to a managing broker with whom the broker is employed or associated as an independent contractor. However, such delegation shall not relieve the delegating broker from responsibility for failure to comply with these trust account requirements.

(2) Broker trust accounts 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 agreement. Interest payable to the broker shall be identified by agreement as consideration for services performed. Offices or firms having more than one broker may utilize a single trust account.

(3) Broker trust accounts must comply with the following:

(a) All monies, belonging to others and accepted by the broker while acting in his capacity as a broker, shall be deposited in a generally insured financial institution located in Montana in an account separate from money belonging to the broker;

(b) The name of such separate account shall be identified by the words "trust account";

(c) Client's funds shall be retained in this bank account until the transaction involved is consummated or terminated, at which time the broker shall account for the full amounts received;

(d) However, trust monies (with the exception of the broker's commissions) may be disbursed in advance of the termination or consummation of the transaction upon written agreement of the buyers and sellers;

(e) At the client's instructions, trust monies may be retained in the trust account although there is no purchase, lease or rental agreement in existence, or when the transaction has been consummated or terminated;

(f) No payments of personal indebtedness of the broker shall be made from such trust account other than a withdrawal of earned commissions payable to such broker or withdrawals made on behalf of the beneficiaries of such trust account;

(g) Money held in the trust account which is due and payable to the broker must be withdrawn within five business days after such money becomes due and payable to the broker;

 

 

 

(h) A broker shall not be entitled to any part of the earnest money or other monies paid to him in connection with any real estate transaction as part or all of his commission or fee until the transaction has been consummated or terminated. The listing agreement shall include a provision for division of monies taken in earnest, when the transaction is not consummated and such monies are retained as forfeiture payment;

(i) A broker shall maintain in his office a complete record of all monies received or escrowed on real estate transactions, in the following manner:

(i) a bank deposit slip showing the date of deposit, amount, source of the money and where deposited;

(ii) monthly bank statements are to be retained and kept on file;

(iii) trust account checks shall be numbered and all voided checks retained. The checks shall denote the broker's business name, address and should be designated as "trust account";

(iv) a record book which shows the chronological sequence in which funds are received and disbursed;

(v) for funds received, the journal must include the date, the name of the party who is giving the money, the name of the principal and the amount;

(vi) for deposit, the checkbook journal must include the date, the name of the party who is giving the money, the name of the principal and the date;

(vii) for disbursements, the checkbook journal must include the date, the payee and the amount;

(viii) a running balance must be shown after each transaction;

(j) A ledger shall be kept to show the receipts and the disbursements as they affect a single, particular transaction as between the buyer and seller, etc. The ledger must include the names of both parties to a transaction, the dates and the amounts received. When disbursing funds, the date, payee and amount must be shown. A running balance must be shown after each transaction;

(k) The trust account must be reconciled monthly except in the case where there has been no activity during that month;

(l) Every broker shall keep permanent records of all funds and property of others received by him for not less than five years from date of receipt of any such funds or property;

(m) Each broker shall authorize the board to examine such trust account by a duly authorized representative of the board. Such examination shall be made at such time as the board may direct;

(n) Existing checks, documents and forms bearing the name "depository account" may be used until current supplies are depleted;

(o) A salesperson, or broker who has delegated the broker's obligation to maintain a trust account to a managing broker pursuant to (1) (c) , shall place all deposits in the custody of the supervising or managing broker in adequate time for the supervising or managing broker to comply with all trust account requirements.

 

 

 

(4) If a broker elects to use a title company to hold earnest money deposits, the broker shall:

(a) obtain from the title company a dated, signed receipt showing the date upon which the earnest money was delivered to the title company;

(b) maintain a detailed ledger showing the amounts deposited with the title company;

(c) instruct the title company that the earnest money is to be immediately deposited in the title company's trust account.

(5) Trust funds received for or in connection with a real estate transaction shall be deposited into a broker's trust account and the broker shall not commingle broker's personal funds or other funds in said trust account with the exception that 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.

(6) A broker may maintain more than one trust account.

(7) Each broker shall ensure that all real estate money received by the broker, the broker's salesperson, or another broker who has delegated the broker's obligation to maintain a trust account to the broker pursuant to (1) (c) is deposited in the broker or title company's trust account within three business days of the broker's or salesperson's (whichever is earlier) receipt of the money, unless otherwise provided in the buy/sell agreement, lease agreement or rental agreement.

(8) The broker is responsible at all times for the proper handling of earnest money, security deposits or other funds received by the broker, the broker's salesperson or funds received by the broker as a managing broker pursuant to (1) (c) on behalf of customers or clients.