(Advance Rental Deposits)
Q As a real estate broker who is actively involved in renting resort cottages and condominiums (usually on a weekly basis), I require prospective tenants to pay an "advance rent deposit". The purpose of the deposit is to reserve the cottage for the tenant's use for a specific period of time and is refundable only in the event the landlord breaches the rental agreement or the cottage is unavailable for occupancy by the tenant. My question is: Upon receipt of the "advance rent deposit", may I deduct my rental commission and forward the balance to the property owner?
A. The "advance rent deposits" as described would be considered " trust funds" and therefore subject to the same requirements of the Real Estate License Law and the Real Estate Licensing Board's Rules and Regulations governing other forms of trust funds (earnest money deposits, tenant security deposits, etc.). As with tenant security deposits, "advance rent deposits" must be held by the broker in his/her trust account until the termination of the tenancy or occupancy unless the tenant otherwise agrees in writing. Should the tenant consent to this advance disbursement of his rent deposit, the broker may with the written permission of the property owner deduct his rental commission from the "advance rent deposit".