Intellectual Property | Real Estate | Technology | Software

CalBRE regulation 2831 – Trust Fund Records to be Maintained

Jul 2nd, 2015 | By | Category: Real Estate Broker Law

CalBRE Compliance Issues for Property Managers

what happens n BRE license hearing

Introduction

California property managers need to be cognizant of the rules for trust fund accounting.  While they may seem relatively simple, there are strict requirements for compliance.  In the current regulatory environment, many property managers are being audited randomly.  Still others are being audited following a complaint to the DRE (now BRE) dealing with a transaction, or possible charges of embezzlement or real estate fraud.  This blog provides an overview of some of the key trust fund accounting provisions.

What is a “trust fund”?

In short, any time a real estate broker takes money belonging to another person (i.e. a deposit in a real estate transaction or a security deposit from a tenant), the broker is taking money belonging to another.  Thus, it is NOT the brokers money, and if this money is handled internally, the broker must keep accurate trust fund accounting records.

Commissioners Regulation 2831. Trust Fund Records to be Maintained

(a) Every broker shall keep a record of all trust funds received, including uncashed checks held pursuant to instructions of his or her principal. This record, including records maintained under an automated data processing system, shall set forth the following information in columnar form:

(1) Date funds received.
(2) From whom funds received.
(3) Amount received.
(4) With respect to funds deposited in trust bank account, date of said deposit.
(5) With respect to funds previously deposited to trust bank account, check number and date of related disbursement.
(6) With respect to funds not deposited in trust bank account, identity of other depository and date funds were forwarded.
(7) Daily balance of trust bank account.

As most brokers are aware, all real estate records of the business must be kept for three years!
BP 10148
Bonus materials: Attorney Steve, the Real Estate Lawyer, discusses Cal. B&P 10148 – duty to keep real estate records for 3 years.  Click on the RED “V” in the corner to subscribe to our FREE real estate videos.

Cal. Commissioners Regulation 2831.1. Separate Record for Each Beneficiary or Transaction.

(a) A broker shall keep a separate record for each beneficiary or transaction, accounting for all funds which have been deposited to the broker’s trust bank account and interest, if any, earned on the funds on deposit. This record shall include information sufficient to identify the transaction and the parties to the transaction. Each record shall set forth the following information in columnar form:

(1) Date of deposit.
(2) Amount of deposit.
(3) Date of each related disbursement.
(4) Check number of each related disbursement.
(5) Amount of each related disbursement.
(6) If applicable, dates and amounts of interest earned and credited to the account.
(b) Maintenance of trust ledgers of separate beneficiaries or transactions, or similar records, or automated data processing systems, in accordance with generally accepted accounting principles will constitute compliance with subdivision (a).

See Apollo Estates, Inc. v. Dep’t of Real Estate, 174 Cal. App. 3d 625, 637, 220 Cal. Rptr. 199, 206 (Ct. App. 1985).  This is an often overlooked item from our perspective having assisted many brokers in real estate audits, and property management compliance issues.  You have to keep a SEPARATE RECORD for EACH CLIENT.  You need to be able to produce these when the BRE comes to audit your business.  Failure to have these can result in either a “cite and fine” case or an “accusation” (if you have a lot of other violations uncovered).  Click on the videos below to watch Attorney Steve discuss these topics.
Th property manager will also have to “reconciliation” of their records at least monthly yo maker sure everything balances.

California Cite & Fine Cases

fines and fees for statutory violations

Attorney Steve, the Real Estate Lawyer discusses the CalBRE “cite and fine” program.  Click on the RED “V” to subscribe to our business and real estate litigation channel.  You can watch the video of what happens at the real estate accusation as described in the above video.  Contact our real estate law firm to help create a plan of action for you.  We offer skilled negotiation and tenacious legal representation.  Call us at (877) 276-5084.  You can also provide your contact number using or contact form below, and we will get back with you, normally within the hour.
[contact_form]
The following two tabs change content below.
We are a business and civil litigation firm with a focus on copyright infringement cases involving illegal movie downloads (torrent cases such as London Has Fallen and Malibu Media defense), software audits (ex. Microsoft audits, Autodesk licensing, Siemens PLM defense, SIIA, Adobe and Business Software Alliance defense) and other software vendors threatening piracy and infringement. We also handle cases involving internet law, anti-SLAPP, media law, right of publicity, trademarks & domain name infringement, and we have a niche practice area handling California BRE licensing disputes, accusations, subpoena response, statement of issues and investigations. We have offices in San Francisco, Beverly Hills, Newport Beach, San Diego & Phoenix, Arizona and accept federal copyright and trademark cases nationwide. All content on our website is general legal information only and not a substitute for legal advice, and should not be relied upon. Decisions to hire counsel should not be based on advertising alone. Blogs, videos and podcasts are authored by Steve Vondran, Esq. unless otherwise noted. We can be reached at (877) 276-5084.

Comments are closed.