ADRE Model Broker Policy Manual-Earnest Money

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Dress Code

This section should include:

  • The Company’s dress code in office.
  • Appropriate attire when interacting with clients

Earnest Money

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This section should include:

  • That the amount and type of earnest money deposit must be clearly identified in the offer to purchase and shall be made payable to a specific Arizona escrow company or the Broker Trust Account.
  • A policy regarding the removal of personal account numbers and personal information from copies of checks before they are forwarded to other Sales Associates.
  • That the Sales Associate acknowledges receipt of the earnest money deposit described in the contract, and must receive the deposit at that time.
  • That a Sales Associate is not to give a receipt if funds are not given to him/her.
  • Whether a Sales Associate can take cash as a deposit and if so, what procedures are to be followed to safeguard it.
Quick Quiz

Fill in the Blank:
That the Associate acknowledges receipt of the earnest money deposit described in the contract, and must receive the deposit at that .

  • How, when, and where earnest money is to be deposited.
  • That the receipt for earnest money deposited with a title company must be turned in to the Broker or the authorized Branch Manager immediately.
  • That once the contract has been signed a Sales Associate is not to hold the check in his/her possession under any circumstances, unless specified otherwise in the executed contract (i.e., Business Opportunities).
  • Whether a Sales Associate must receive specific authorization from the Broker before accepting a post-dated check from any party in a real estate transaction. Instructions that regardless of whether the contract requires the deposit to be placed in a trust account or turned over to an escrow company, it is to be promptly given to the Broker, and the Broker must produce a paper trail to show how it was handled, i.e., documentation showing what was done with the deposit and when.
  • Company policy regarding improper handling of earnest money and consequences, such as, failing to deposit earnest money by the specified time or falsely representing that earnest money has been deposited.
Quick Quiz

Fill in the Blank:
That the for earnest money deposited with a title company must be turned in to the Broker or the authorized Branch Manager .

32-2151. Disposition of funds; trust money deposit requirements

download (1)A. Unless otherwise provided in writing by all parties to a transaction, any licensed real estate broker who does not immediately place all funds entrusted to the broker, in the broker’s capacity as a real estate broker, in a neutral escrow depository in this state shall upon receipt place all such funds in a trust fund account in a federally insured or guaranteed account in a depository located in this state. The commissioner may adopt such rules as are necessary to provide for records to be maintained and the manner in which such trust fund account deposits may be made.

B. The following minimum requirements apply to each broker’s trust fund account:

1. The broker shall make deposits to trust fund accounts by deposit slips. Receipts or other documentation shall identify each transaction, the date and the amount of each deposit, and the names of parties involved in the transaction represented by the deposit and monies shall be used only for the purpose for which the monies were deposited.

2. The broker shall retain a complete record of all monies received in connection with a real estate transaction in the main or branch office of the designated broker in this state or at an off-site storage location in this state if the broker provides prior written notification of the street address of the off-site storage location to the department. A broker’s records shall be kept according to generally accepted accounting principles and shall include a properly descriptive receipt and disbursement journal and client ledger. The broker shall keep any electronic records in a manner allowing reconstruction in the event of destruction of electronic data. The broker shall maintain a trust fund account bank reconciliation and client ledger balance on a monthly basis and shall remove any interest earned on a trust fund account at least once every twelve months. A broker shall not permit an advance payment of monies belonging to others to be deposited in the broker’s personal account or to be commingled with personal monies. It is not considered commingling if, when establishing a trust fund account, a broker deposits monies not exceeding three thousand dollars to keep the account open or to avoid charges for an insufficient minimum balance.

C. An agreement to place monies entrusted to the broker in a depository that is located outside of this state is valid if all parties to the transaction agree in writing and either:

1. The monies are placed in a property management trust account established pursuant to section 32-2174 and:

(a) The account is federally insured or guaranteed.

(b) The property management agreement contains:

(i) Disclosure that the department’s regulatory protections of the owner’s monies may be significantly hampered.

(ii) Disclosure that the owner may not have access to or any control over the trust account, except to audit and review the status of the account.

(iii) An addendum that has the signed authorization by an appropriately empowered official of the depository in which the trust account is placed that the trust account and all related documentation will be open to examination by the department and the owner.

2. If the monies are not deposited in a property management trust account, the broker discloses to the parties to the transaction that potential risks may accrue as the result of depositing the monies in a depository outside this state.

D. This section shall not be construed to allow a broker to commingle monies entrusted to the broker with the broker’s own monies, unless the commissioner adopts rules that allow commingling.

Quick Quiz

Fill in the Blank:
that the owner may not have access to or any control over the trust account, except to audit and review the status of the.

 

 

32-2151.01. Broker requirements; record keeping requirements; definition

A. Each licensed employing broker shall keep records of all real estate, cemetery, timeshare or membership camping transactions handled by or through the broker and shall keep employment records, including copies of employment status, for all current and former employees. The records required by this section shall include copies of earnest money receipts, confirming that the earnest money has been handled in accordance with the transaction, closing statements showing all receipts, disbursements and adjustments, sales contracts and, if applicable, copies of employment agreements. The records shall be open at all reasonable times for inspection by the commissioner or the commissioner’s representatives. The records of each transaction and employment records shall be kept by the broker for a period of at least five years from the date of the termination of the transaction or employment. The records shall be held in the employing broker’s principal office or licensed branch office in this state or at an off-site storage location in this state if the broker provides prior written notification of the street address of the off-site storage location to the department.

B. Except as provided by section 32-2174, subsection C, a broker shall not grant any person authority to withdraw monies from the broker’s trust fund account unless that person is a licensee under that broker’s license.

C. A broker shall specifically state in the real estate purchase contract, lease agreement or receipt for earnest money the type of earnest money received in any real estate transaction, whether it is cash, a check, a promissory note or any other item of value.

D. All licensees shall promptly place all cash, checks or other items of value received as payment in connection with a real estate transaction in the care of the designated broker.

E. The broker shall maintain each real estate purchase contract or lease agreement and the transaction folder in which it is kept in a chronological log or other systematic manner that is easily accessible by the commissioner or the commissioner’s representatives.

F. Sales transaction folders shall include:

1. Confirmation that the earnest monies or other monies handled by or through the broker were handled according to instructions given by or agreed to by the parties to the transaction.

2. A complete copy of the sales contract, any escrow account receipt, any closing or settlement statement and, if applicable, a copy of the escrow instructions, listing agreement, employment agreement and release of escrow monies.

G. The designated broker shall review each listing agreement, purchase or nonresidential imageslease agreement or similar instrument within ten business days of the date of execution by placing the broker’s initials and the date of review on the instrument on the same page as the signatures of the parties. A designated broker may authorize in writing an associate broker who the designated broker employs to review and initial these instruments on the designated broker’s behalf.

H. The broker shall retain all real estate purchase and nonresidential lease contracts and employment agreements, or copies of these documents, in the employing broker’s principal office or licensed branch office or at an off-site storage location in this state if the broker provides prior written notification of the street address of the off-site storage location to the department.

I. The broker shall retain an original, a copy or a microfilm copy of any document evidencing a rejected offer to purchase real property as a matter of record for at least one year. In instances that result in binding contracts, the broker shall retain prior rejected offers for at least five years.

J. If real property in a development is sold or leased by a developer without the services of a listing or selling broker, the developer shall keep all records required by subsections A and C of this section.

K. For the purposes of this section, “business day” means a day that is not a Saturday, a Sunday or any other legal holiday in this state.

Quick Quiz

Fill in the Blank:
The of each transaction and employment records shall be kept by the broker for a of at least five years from the date of the termination of the transaction or .

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