"Records relative to the deposit, maintenance, and withdrawal of the money or other property of his principals shall be properly maintained by a broker . . ." (G.S. 93A-6(c) ).
Do you rely on your trust account checkbook stubs and cancelled checks alone to keep up with funds in your trust account? I f so, rest assured that you are joined by many other brokers presently engaging in this questionable business practice. Reports from our field representatives indicate that an ever-increasing number of brokers throughout the state are using their escrow or trust account checkbooks as their only source of information regarding funds placed in their trust.
You may argue that your checkbook provides all data sufficient to carry out your fiduciary responsibilities. You may argue that your limited accounting and bookkeeping skills prevent you from instituting a more detailed system of trust account record keeping. Nevertheless, the Licensing Board feels that a COMPLETE, YET UNCOMPLICATED METHOD OF TRUST ACCOUNT RECORD KEEPING IN THE FORM OF A GENERAL JOURNAL SHOULD BE ADOPTED BY EACH AND EVERY BROKER charged with the serious responsibilities of trusteeship.
Although your accountant can likely devise a Journal system tailored to fit your particular real estate operation, the Licensing Board offers the following model for your consideration which is designed to provide a thorough but uncluttered description of trust account receipts and disbursements. Note that in addition to giving the amounts received and paid out, the parties to the transaction, the subject property, and essential dates, this model also provides a convenient daily balance which can be checked at a glance.
While this model should meet the needs of most general real estate brokerage agencies, many agencies maintain, in addition ' a separate ledger for each property sold or managed, showing receipts and disbursements affecting that particular property' Furthermore all such escrow records must be retained for 3 years in accordance with the Licensing Board's recently adopted Rule .0108.
Remember, as the guardian of funds which have been entrusted to your care, your principals rightfully demand and expect to receive your faithful and impartial vigilance and your competent, professional service. Accurate trust account records are essential in fulfilling this responsibility.
| Record of All Trust Funds Received and Paid Out | |||||||||||
| Trust Fund Bank Account | |||||||||||
| RECEIVED | PAID OUT | ||||||||||
| 19__ Date Received |
From Whom Received |
Description | Amount Received |
Date of Deposit |
XX | To Whom Paid |
Description | Amount Paid Out |
Check Number |
Date Paid Out |
Balance |
| 2-2-76 | John A. Doe | Earnest Money on Atlas Property | $500.00 | 2-23-76 | $500.00 | ||||||
| 2-23-76 | William Manning | Rental Payment on Snipes Property | 150.00 | 2-23-76 | 650.00 | ||||||
| Acme repair | Plumbing Repair on Snipes Property | 30.00 | 105 | 2-24-76 | 620.00 | ||||||
| George Snipes | Net Rent Share on Snipes Property | 105.00 | 106 | 2-25-76 | 515.00 | ||||||
| Broker | Rental Commission on Snipes Property |
15.00 | 107 | 2-25-76 | 500.00 | ||||||
| 3-1-76 | James Warren | Earnest Money on Griffin Property | 1,000.00 | 3-26-76 | 1,500.00 | ||||||
| Edward O. Allan | Proceeds of Sale Allan Property |
500.00 | 108 | 3-5-76 | 1,000.00 | ||||||
| 3-7-76 | David Martin | Rental Damage Deposit Jenkins Property | 50.00 | 3-8-76 | 1,050.00 | ||||||
| Janice Warren | Refund Earnest Money Griffin Property |
1,000.00 | 109 | 3-7-76 | 50.00 | ||||||
1 . Feb. 22 - Broker received $500.00 in earnest money from John Doe as purchase deposit on property owned by Edward Allan.
2. Feb. 23 - Broker received $150.00 rent from William Manning on property owned by George Snipes.
3. Feb. 24 - Broker paid $30.00 to Acme Repair for plumbing repair on Snipes property.
4. Feb. 25 - Broker paid $105.00 to George Snipes for his share of rent.
5. Feb. 25 - Broker received $15.00 rental commission on Snipes property.
6. March 1 - Broker received $1,000.00 in earnest money from James Warren as purchase deposit on Griffin property.
7. March 5 - Broker paid $500.00 to Edward Allan on closed transaction for property sold to John Doe.
8. March 7 - Broker received $50.00 rental damage deposit from David Martin on property owned by Jenkins.
9. March 7 - Broker refunded $1,000.00 earnest money to James Warren due to Griffin's rejection of offer.