W. Va. Code R. § 174-1-15

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 174-1-15 - Trust Funds and Accounts

15.1. Commingling Prohibited. -- In order to prevent the commingling of trust funds with other funds, brokers are required to deposit all trust funds into one or more trust accounts established in accordance with W. Va. Code § 30-40-18, which accounts may be audited by the Commission through its authorized representative.

15.2. Funds received by salesperson or associate broker. -- Every salesperson and associate broker who receives any trust funds shall immediately or by the next business day following receipt pay over or deliver the trust funds to the responsible broker. No salesperson or associate broker shall collect any money in connection with any real estate transaction, whether as a commission, deposit, payment, rental, or otherwise, except in the name of and with the consent of the responsible broker.

15.3. Deposit of trust funds. -- Unless otherwise directed or allowed in the signed purchase agreement, every broker who receives any trust funds shall immediately or by the next business day following receipt deposit the trust funds in the broker's trust account.

15.4. Interest bearing trust account. -- Trust funds may be transferred from a non-interest-bearing trust account into an interest-bearing trust account only under the following conditions:

15.4.a. The broker must obtain, from all parties to the transaction, a written agreement which must contain, at a minimum:

15.4.a.1. Authorization to remove the funds from the trust fund account for the express purpose of depositing the funds into an interest-bearing trust fund account;

15.4.a.2. Identification of the financial institution and the type of account to be opened;

15.4.a.3. Identification of who will earn the interest on the funds; and

15.4.a.4. How and when the interest will be disbursed.

15.4.b. No interest, privilege, or other compensation received or obtained by virtue of establishing or maintaining any interest-bearing trust account shall benefit the broker or any other licensee.

15.4.c. Upon closing any interest-bearing trust account established in compliance with this sub-section, the total proceeds of the account must be deposited in the broker's trust fund account prior to any disbursements being made.

15.5. Sweep accounts. -- For brokers with excess funds, which means trust account funds in excess of the amount that is insured against loss by the broker's financial institution, the federal insurance requirement set forth inWest Virginia Code§ 30-40-18(c) may be complied with either through the use of multiple trust accounts at various financial institutions or the use of a cash sweep account established at a financial institution for which a Trust Fund Account Statement and Consent to Examine is on file with this Commission in accordance with the following requirements:

15.5.a. Addendum required.

15.5.a.1. An addendum in the form prescribed by the Commission must be signed by the broker and the financial institution and made a part of the Trust Fund Account Statement and Consent to Examine; and

15.5.a.2. A copy of the Addendum must be submitted to the Commission within ten (10) business days of entering into the agreement to establish the cash sweep account.

15.5.b. Ability to advance funds required. The broker's relationship institutions, which are (1) the financial institution where the broker has both a trust fund account and a cash sweep account and (2) the financial institution serving as the custodian of the cash sweep account, must agree to advance funds on any check drawn against the broker's trust fund account for which there are sufficient funds in the cash sweep account unless prohibited by applicable law or court order or they cannot by reason of force majeure or circumstances beyond the relationship banks' control.

Inasmuch as the advanced payment is not a loan and the funds in the cash sweep account are not collateral for a loan, the anticipated debit of the funds in the cash sweep account does not breach the broker's fiduciary obligations in relation to the broker's trust fund account and does not violate West Virginia Code § 30-40-18(f) and this rule.

W. Va. Code R. § 174-1-15