2013 -- H 5997

=======

LC02389

=======

STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

____________

A N A C T

RELATING TO BUSINESSES AND PROFESSIONS - REAL ESTATE BROKERS AND

SALESPERSONS

     Introduced By: Representative Gregg Amore

     Date Introduced: April 23, 2013

     Referred To: House Corporations

It is enacted by the General Assembly as follows:

1-1

     SECTION 1. Section 5-20.5-26 of the General Laws in Chapter 5-20.5 entitled "Real

1-2

Estate Brokers and Salespersons" is hereby amended to read as follows:

1-3

     5-20.5-26. Escrows. -- (a) Escrow.

1-4

      (1) Escrow accounts.

1-5

      (i) Each real estate firm shall maintain an escrow account under the supervision of the

1-6

broker qualified to do business in the name and on behalf of the corporate, partnership or

1-7

association licensee. All those funds paid to a salesperson or paid directly to a broker shall be

1-8

segregated on the broker's books and deposited in an account in a recognized federally insured

1-9

financial institution in Rhode Island separate from any account containing funds owned by the

1-10

broker. A broker or salesperson shall not commingle deposit money or other customers' funds and

1-11

his or her own funds, use a customer's funds as his or her own, or fail to keep an escrow or trustee

1-12

account of funds deposited with him or her relating to a real estate transaction, for a period of

1-13

three (3) years, showing to whom the money belongs, date deposited, date of withdrawal, to

1-14

whom paid, and any other pertinent information that the commission requires. Those records are

1-15

to be available to the commission and the department or their representatives, on demand, or upon

1-16

written notice given to the depository. Each broker/office supervisor shall maintain a monthly

1-17

report as to the status of that office's escrow account, and is responsible for its accuracy.

1-18

      (ii) A multi-office firm may either have an escrow account for each office or one central

1-19

escrow account for the firm.

2-1

      (iii) Funds held in escrow may be applied to the commission when earned by the listing

2-2

company, and all earned commissions shall be paid and disbursed at the closing.

2-3

      (iv) Whenever the ownership of any deposit monies received by a broker or salesperson

2-4

pursuant to this section is in dispute by the parties to a real estate transaction, the broker or

2-5

salesperson shall deposit the monies with the general treasurer within one hundred eighty (180)

2-6

days of the date of the original deposit, those monies to be held in trust by the general treasurer

2-7

until the dispute is mediated, arbitrated, litigated, or otherwise resolved by the parties. The parties

2-8

to a real estate transaction may agree in writing to extend the time period by which the monies

2-9

must be deposited with the general treasurer in accordance with regulations promulgated by the

2-10

department of business regulation.

2-11

      (v) The department of business regulation shall have the authority to promulgate rules

2-12

and regulations with respect to such escrow accounts and the deposit of monies with the general

2-13

treasurer.

2-14

      (2) Escrow agents. - Funds or deposits placed in escrow may be held by any person or

2-15

entity legally authorized to hold funds in that capacity, e.g., the real estate broker or attorney.

2-16

      (b) Dual activities. - In all real estate transactions in which a broker holds more than one

2-17

title, e.g., builder, contractor, or insurance agent, all deposit monies received must be placed in

2-18

the brokers real estate escrow account, unless there is a contractual agreement between the

2-19

principals to the contrary.

2-20

      (c) Unlawful appropriation. - Pursuant to section 11-41-11.1, any licensee to whom any

2-21

money or other property is entrusted as escrow funds, who intentionally appropriates to the

2-22

licensee's own use that money or property, or transfers the funds from an escrow account to a

2-23

company or personal account prior to a closing, is guilty of unlawful appropriation.

2-24

     SECTION 2. This act shall take effect upon passage.

=======

LC02389

=======

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO BUSINESSES AND PROFESSIONS - REAL ESTATE BROKERS AND

SALESPERSONS

***

3-1

     This act would require real estate commissions be paid at closing.

3-2

     This act would take effect upon passage.

=======

LC02389

=======