Is your brokerage compliant with Ohio’s trust account requirements?
On January 5, 2015
By Peg Ritenour, OAR Vice President of Legal Services/Administration
As all brokers know, Ohio license law requires that that a real estate brokerage maintain a trust or special account. The purpose of this account is to hold monies belonging to other parties. With the start of a new year it is a good time to assure that your brokerage is in compliance with basic trust account requirements. Here they are:
- The account must be non-interest bearing and must be distinct from any personal, operating, or other account of the brokerage.
- All monies received in a fiduciary capacity, including earnest money, escrow funds etc., must be deposited in this account.
- The trust or special account must be in a financial institution located in the state of Ohio.
- The account must be in the broker’s name as it appears on his license. If the broker has been granted permission by the Division to do business in a trade name (referred to by the Division as a “dba”) then that is the only name that should appear on the account.
- The account must be labeled a “trust account” or “special account” and all checks and deposit tickets must contain those words as well. (“Escrow account” is not acceptable.)
- The name, account number and location of the financial institution where the account is maintained must be submitted in writing to the Division of Real Estate and Professional Licensing.
- Brokers may maintain more than one trust or special account.
- Brokers may not deposit or commingle their own funds in the trust or special account. However, a broker is a permitted to deposit and maintain his own funds in the trust account if they are clearly identified as such and are deposited for one of the following purposes:
- If the financial institution where the account is located requires a special minimum balance that must be maintained in order to keep the account open, the broker may maintain that amount in the account as long as it is designated as the broker’s funds.
- If the financial institution where the account is located charges a service fee for the account, the broker may maintain a reasonable amount to cover the service charge.
- Brokers must maintain a record of all trust funds that are received for a minimum of three years. These records must be kept in columnar form and must include the following minimum information:
- Date funds are received;
- Party from whom funds are received and the purpose of the funds;
- Amount received:
- Date funds are deposited in special or trust bank account;
- Check number and date funds are disbursed;
- Party to whom funds are disbursed and purpose of disbursement;
- Any other documents necessary and sufficient to verify and explain record entries and identify the current balance in the special or trust bank account.
If your brokerage engages in property management it must maintain a separate trust account for funds received in the course of such management. Click here for OAR’s White Paper on Property Management.