Chapter REEB 18

Chapter REEB 18

TRUST ACCOUNTS

REEB 18.01   Authority.

REEB 18.02   Definitions.

REEB 18.031   Deposits and types of accounts.

REEB 18.032   Number of real estate trust accounts.

REEB 18.033   Opening and closing real estate trust accounts.

REEB 18.034   Account designation.

REEB 18.035   Duty to notify the department.

REEB 18.036   Authorization to examine real estate trust accounts and records.

REEB 18.037   Form for notification and authorization.

REEB 18.04   Authorization to sign trust account checks.

REEB 18.05   Receipt for earnest money received by the licensee.

REEB 18.06   Escrow agreement for earnest money not held by the firm.

REEB 18.07   After closing escrow agreements.

REEB 18.09   Disbursement of trust funds.

REEB 18.10   Comingling funds prohibited.

REEB 18.11   Non-depositable items.

REEB 18.13   Bookkeeping system.

REEB 18.14   Violation of rules.

Ch. REEB 18 Note Note: Chapter REB 9 as it existed on February 28, 1983 was renumbered to be chapter RL 18, effective March 1, 1983. Chapter RL 18 was renumbered chapter REEB 18 under s. 13.92 (4) (b) 1., Stats., Register November 2011 No. 671.

REEB 18.01 REEB 18.01 Authority. The following rules are adopted pursuant to ss. 227.11, 452.07 and 452.13, Stats.

REEB 18.01 History History: Cr. Register, April, 1981, No. 304, eff. 5-1-81; renum. from REB 9.01 and am. Register, February, 1983, No. 326, eff. 3-1-83; CR 13-072: am. (title) Register May 2014 No. 701, eff. 7-1-14.

REEB 18.02 REEB 18.02 Definitions. In this chapter:

REEB 18.02 Note Note: See also definitions in s. REEB 11.02.

REEB 18.02(1) (1) “Business day” means any day excluding Saturdays, Sundays, any legal public holiday under Wisconsin or Federal law, and any other day designated by the President of the United States such that the U.S. postal service does not receive registered mail or make regular deliveries on that day.

REEB 18.02(1e) (1e) “Client funds” has that meaning given in s. 452.13 (1) (a), Stats.

REEB 18.02 Note Note: Section 452.13 (1) (a), Stats., reads: ‘“Client funds” means all downpayments, earnest money deposits or other money related to a conveyance of real estate that is received by a broker, salesperson or time-share salesperson on behalf of the broker’s, salesperson’s or time-share salesperson’s principal or any other person. “Client funds” does not include promissory notes.’

REEB 18.02(4) (4) “Depository institution” has that meaning given in s. 452.13 (1) (b), Stats.

REEB 18.02 Note Note: Section 452.13 (1) (b), Stats., reads: ‘“Depository institution” means a bank, savings bank, savings and loan association or credit union that is authorized by federal or state law to do business in this state and that is insured by the federal deposit insurance corporation or by the national credit union share insurance fund.’

REEB 18.02(5) (5) “Real estate trust account” means an account for real estate trust funds maintained at a depository institution from which withdrawals or transfers can be made without delay, subject to any notice period that the depository institution is required to observe by law, and includes all of the following:

REEB 18.02(5)(a) (a) Interest-bearing common trust accounts established for client funds.

REEB 18.02(5)(b) (b) Non-interest bearing real estate trust accounts maintained for real estate trust funds other than client funds.

REEB 18.02(5)(c) (c) Interest-bearing real estate trust accounts maintained for real estate trust funds other than client funds.

REEB 18.02(6) (6) “Real estate trust funds” means any cash, checks, share drafts, drafts, or notes received by a firm or licensee on behalf of a principal or any other person including any of the following:

REEB 18.02(6)(a) (a) Payments on land contracts, mortgage payments and any other receipts pertaining to mortgages.

REEB 18.02(6)(b) (b) Tax and insurance payments held in escrow.

REEB 18.02(6)(c) (c) Advance fees and finder’s fees, unless non-refundable.

REEB 18.02(6)(d) (d) Rental application deposits and rents, but only when received while acting as an agent for another.

REEB 18.02(6)(e) (e) Payments received for subsequent repayment to a third party.

REEB 18.02(6)(f) (f) Security deposits on rental property, except as provided in s. REEB 18.031 (4).

REEB 18.02(6)(g) (g) Initial and additional earnest money downpayments and other funds received in connection with offers to purchase, options, and exchanges, even if the broker or salesperson receives the downpayments or funds when negotiating the sale of real estate or a business opportunity which the broker or salesperson owns in whole or in part, or when negotiating the purchase of real estate or a business opportunity for ownership in whole or in part by the broker or salesperson.

REEB 18.02 History History: Cr. Register, April, 1981, No. 304, eff. 5-1-81; r. and recr. (3), Register, April, 1982, No. 316, eff. 5-1-82; renum. from REB 9.02 and am. (1), Register, February, 1983, No. 326, eff. 3-1-83; cr. (2m), am. (3) (a) (intro.), renum. (3) (c) and (d) to be (3) (a) 4. and 5. and am. 5., Register, June, 1984, No. 342, eff. 7-1-84; r. and recr. Register, August, 1994, No. 464, eff. 9-1-94; r. (3), am. (5) (intro.), Register, July, 1998, No. 511, eff. 8-1-98; correction in (6) (f) made under s. 13.92 (4) (b) 7., Stats., Register November 2011 No. 671; CR 13-072: renum. (1) to (1e), cr. (1), am. (5) (intro.) to (b), (6) Register May 2014 No. 701, eff. 7-1-14; EmR1620: emerg. r. (2), am. (6) (intro.), (g), eff. 7-1-16; CR 16-042: r. (2), am. (6) (intro.), (g) Register February 2017 No. 734, eff. 3-1-17.

REEB 18.031 REEB 18.031 Deposits and types of accounts.

REEB 18.031(1) (1) Time of deposit. A firm shall deposit all real estate trust funds received by the firm or licensees associated with the firm in a real estate trust account within 48 hours of receipt of the trust funds. If funds are received on a day prior to a holiday or other day when the depository institution is closed, the firm shall deposit the funds within the next 2 business days. If a firm receives funds which cannot be deposited by the firm, the firm shall, no later than one business day after receipt, either:

REEB 18.031(1)(a) (a) Forward the funds to the payee, if someone other than the firm.

REEB 18.031(1)(b) (b) Return the funds to the payer.

REEB 18.031(2) (2) Duty of licensees. A licensee who receives real estate trust funds shall promptly submit the funds to the firm of the licensee.

REEB 18.031(3) (3) Interest-bearing accounts.

REEB 18.031(3)(a) (a) Client funds shall be deposited in an interest-bearing common trust account and the department of administration shall be the beneficial owner of the interest accruing to the account, minus any service charges. At no time may the firm remove or use the interest earned on such accounts.

REEB 18.031(3)(b) (b) Real estate trust funds, other than client funds, may be deposited in an interest-bearing account if the firm obtains from the persons for whom the funds are being held written authorization to deposit the funds in an interest-bearing account and if the authorization specifies how and to whom the interest will be disbursed. None of the interest earned on the funds deposited into an interest-bearing account may inure to the benefit of the firm.

REEB 18.031(4) (4) Security deposits. A licensee having an ownership interest in a rental property shall either place security deposits related to that property in a real estate trust account or shall provide in a lease for security deposits to be held in an account maintained in the name of the owner or owners.

REEB 18.031(5) (5) Rental owner’s account.

REEB 18.031(5)(a) (a) In this subsection, “owner’s account” means an account maintained by an owner of rental property for depositing and disbursing any funds payable to or by the owner.

REEB 18.031(5)(b) (b) A firm may directly deposit into an owner’s account rental application deposits, rents and security deposits which may have been made payable to one or more owners. The firm or licensee associated with the firm may be designated as a signatory on the owner’s account and may make disbursements from that account to the extent authorized by the owner in writing.

REEB 18.031 History History: Cr. Register, August, 1994, No. 464, eff. 9-1-94; correction made in (title) under s. 13.92 (4) (b) 2., Stats., Register November 2011 No. 671; CR 13-072: am. (1) Register May 2014 No. 701, eff. 7-1-14; EmR1620: emerg. am. (1) (intro.), (a), (2), (3), (5) (b), eff. 7-1-16; CR 16-042: am. (1) (intro.), (a), (2), (3), (5) (b) Register February 2017 No. 734, eff. 3-1-17.

REEB 18.032 REEB 18.032 Number of real estate trust accounts. A firm may maintain more than one real estate trust account, including more than one interest-bearing common trust account for client funds, if the firm notifies the department of these accounts, as required in s. REEB 18.035.

REEB 18.032 History History: Cr. Register, August, 1994, No. 464, eff. 9-1-94; correction made under s. 13.92 (4) (b) 7., Stats., Register November 2011 No. 671; EmR1620: emerg. am., eff. 7-1-16; CR 16-042: am. Register February 2017 No. 734, eff. 3-1-17.

REEB 18.033 REEB 18.033 Opening and closing real estate trust accounts.

REEB 18.033(1) (1) Opening an account. A firm shall open a real estate trust account if the firm receives real estate trust funds.

REEB 18.033(2) (2) Closing an account. A firm may close a real estate trust account if no real estate trust funds remain in the account or for reasons specified in s. REEB 18.035.

REEB 18.033 History History: Cr. Register, August, 1994, No. 464, eff. 9-1-94; CR 13-072: am. (title), (2) Register May 2014 No. 701, eff. 7-1-14; EmR1620: emerg. am., eff. 7-1-16; CR 16-042: am. Register February 2017 No. 734, eff. 3-1-17.

REEB 18.034 REEB 18.034 Account designation.

REEB 18.034(1) (1) Name on trust account. A firm shall name the firm’s real estate trust account with the name appearing on the broker’s license or with a trade name submitted to the department under s. REEB 23.03 and shall include the words “trust account” in the name of the account.

REEB 18.034(2) (2) Name on checks. A firm shall imprint the name of the real estate trust account on real estate trust account checks, share drafts or drafts.

REEB 18.034 History History: Cr. Register, August, 1994, No. 464, eff. 9-1-94; correction in (1) made under s. 13.92 (4) (b) 7., Stats., Register November 2011 No. 671; CR 13-072: cr. (1) (title) Register May 2014 No. 701, eff. 7-1-14; EmR1620: emerg. am., eff. 7-1-16; CR 16-042: am. Register February 2017 No. 734, eff. 3-1-17.

REEB 18.035 REEB 18.035 Duty to notify the department.

REEB 18.035(1) (1) Opening an account. No later than 10 days after opening any real estate trust account a firm shall provide the department with the name and number of the account, with the name of the depository institution in which the firm holds the account and with information concerning whether the account is for client funds or for real estate trust funds other than client funds. The information shall be provided on a form, as required in s. REEB 18.037.

REEB 18.035(2) (2) Changing or closing an account. A firm shall notify the department no later than 10 days after a firm changes a real estate trust account name or number, changes the real estate trust account from one depository institution to another, closes a real estate trust account or changes a real estate trust account to or from an interest-bearing common trust account established for client’s funds. The notification shall be provided on a form, as required in s. REEB 18.037. When closing a real estate trust account, a firm may inform the board by letter.

REEB 18.035 History History: Cr. Register, August, 1994, No. 464, eff. 9-1-94; correction in (1), (2) made under s. 13.92 (4) (b) 7., Stats., Register November 2011 No. 671; CR 13-072: am. (2) Register May 2014 No. 701, eff. 7-1-14; EmR1620: emerg. am., eff. 7-1-16; CR 16-042: am. Register February 2017 No. 734, eff. 3-1-17.

REEB 18.036 REEB 18.036 Authorization to examine real estate trust accounts and records.

REEB 18.036(1) (1) Firm’s authorization. No later than 10 days after opening a real estate trust account a firm shall furnish the department authorization for the department to examine and audit all of the firm’s real estate trust account records and authorization for the department of administration to examine all of the firm’s interest-bearing common trust accounts maintained for client funds. The authorization shall be provided on a form, as required in s. REEB 18.037.

REEB 18.036(2) (2) Depository institution’s certification. No later than 10 days after opening a real estate trust account a firm shall obtain the certification of every depository institution in which the firm maintains a real estate trust account attesting to the existence of the account and consenting to the examination and audit of the account by a duly authorized representative of the department or, in the case of interest-bearing common trust accounts maintained for client funds, the department of administration. The certification shall be provided to the department on a form, as required in s. REEB 18.037.

REEB 18.036 History History: Cr. Register, August, 1994, No. 464, eff. 9-1-94; correction in (1), (2) made under s. 13.92 (4) (b) 7., Stats., Register November 2011 No. 671; EmR1620: emerg. am., eff. 7-1-16; CR 16-042: am. Register February 2017 No. 734, eff. 3-1-17.

REEB 18.037 REEB 18.037 Form for notification and authorization. A firm shall provide the information and authorization as specified in ss. REEB 18.035 and 18.036 on a form provided by the department. This form shall be designated “consent to examine and audit trust account.”

REEB 18.037 Note Note: A copy of this form may be obtained from the Department of Safety and Professional Services, Division of Professional Credential Processing, 1400 East Washington Avenue, P.O. Box 8935, Madison, Wisconsin 53708-8935 or downloading from the department’s webpage: http://dsps.wi.gov.

REEB 18.037 History History: Cr. Register, August, 1994, No. 464, eff. 9-1-94; correction made under s. 13.92 (4) (b) 7., Stats., Register November 2011 No. 671; CR 13-072: am. Register May 2014 No. 701, eff. 7-1-14; EmR1620: emerg. am., eff. 7-1-16; CR 16-042: am. Register February 2017 No. 734, eff. 3-1-17.

REEB 18.04 REEB 18.04 Authorization to sign trust account checks. A firm may authorize other persons to sign real estate trust account checks, share drafts or drafts drawn on the firm’s real estate trust account if the person is at least 18 years of age.