TEXAS REAL ESTATE COMMISSION DOUGLAS E. OLDMIXON, ADMINISTRATOR Agenda Item 22: Discussion and possible action to propose amendments to 22 TAC 535.146, Failure to Properly Account for Money; Commingling The proposed amendments are made following a comprehensive rule review for this Chapter to better reflect current TREC procedures and to simplify and clarify where needed. The amendments create a new rule 535.146, Maintaining Trust Money that combine and replace 535.146, Failure to Properly Account for Money; Commingling; 535.159, Failure to Properly Deposit Escrow Monies; and 535.160, Failing to Properly Disburse Escrow Money. Staff Recommendation: Propose amendments as presented Recommended Motion: MOVED, that staff is authorized, on behalf of this Commission, to submit the proposed new rule 22 TAC, 535.146, Maintaining Trust Money, as presented, along with any technical or non-substantive changes required for proposal, to the Texas Register, for publication and public comment.
TEXAS REAL ESTATE COMMISSION DOUGLAS E. OLDMIXON, ADMINISTRATOR AGENDA ITEM 22 PROPOSED RULE ACTION FROM THE APRIL 28, 2014 MEETING OF THE COMMISSION Chapter 535 General Provision 22 TAC New 535.146. Maintaining Trust Money. 535.146. Maintaining Trust Money. (a) Definitions. In this section: (1) Trust money means client s money, earnest money, rent, unearned fees, security deposits, or any money held on behalf of another person. (2) Trust account means an account managed by one party for the benefit of another in a banking institution authorized to do business in Texas. (b) Acceptance of Trust Money (1) Any trust money accepted by a broker is held in a fiduciary capacity and must be maintained in a designated trust account maintained by the broker or delivered to an escrow agent authorized in Texas in accordance with the agreement of the principals of the transaction. (2) A salesperson shall not maintain a trust account. Any trust money received by a salesperson must be immediately delivered to the salesperson's sponsoring broker. (3) Unless a different time to deposit trust money is expressly agreed upon in writing by the principals to the transaction, any trust money received by the broker must be deposited in a trust account or delivered to an authorized escrow agent within a reasonable time, which the Commission has determined to be not later than the close of business of the second working day after the date the broker receives the trust money. (4)The broker shall not: (A) commingle trust money with the broker s personal money or other non-trust money; or (B) deposit or maintain trust money in a personal account or any kind of business account. (5) The following is prima facie evidence of commingling trust money with the broker's own money: (A) placing trust money in a broker s personal or operating account; or (B) paying operating expenses or making withdrawals from a trust account for any purpose other than proper disbursement of trust money. (c) Trust account requirements. (1) The trust account must be clearly identified as a trust account; (2) The broker may, but is not required to, maintain separate trust accounts for each client or type of trust money maintained by the broker, such as earnest money deposits or security deposits received for the management of rental property. (3) If trust money held by a broker is deposited in an interest bearing account: (A) the money must be available for disbursal at the appropriate time; and (B) unless otherwise provided for by an agreement signed by the party depositing the money with the broker, any interest earned on the money [account] must be distributed to any parties to whom the money is disbursed. [that were equitable owners of the money kept in the account during the time the interest is earned.] (4) A broker may deposit and maintain a reasonable amount of money in the trust account to cover bank service fees, including fees charged for insufficient funds. Detailed records must be kept for any funds deposited under this exception. (5) If a broker acquires ownership of trust money held in a trust account, including entitlement to compensation[to a commission for a real estate transaction], such money must be removed from the trust account not later the 30th day after the date the broker acquires ownership of the money. (6) The broker must retain a documentary record of each deposit or withdrawal from the trust account. (7) A broker may only authorize [designate] another license holder [person as an authorized signatory on] to withdraw or transfer money from any trust account but the broker remains responsible and accountable Page 1 of 2
AGENDA ITEM 22 PROPOSED RULE ACTION FROM THE APRIL 28, 2014 MEETING OF THE COMMISSION Chapter 535 General Provision 22 TAC New 535.146. Maintaining Trust Money for all trust money received by that broker and all deposits to or disbursements from the trust account. (8) If a broker deposits trust money in the form of a check in a trust account and the check is dishonored by the financial institution on which it was drawn, the broker shall immediately notify all parties to the transaction in writing. (d) Disbursement of trust money. (1) A broker may only disburse money from the broker's trust account in accordance with the agreement under which the money was received. (2) If any or all of the parties to a real estate transaction make a written demand for trust money, the broker must pay the trust money to the party or parties entitled to the money within a reasonable time, which the Commission has determined to be not later than the 30th day after the date the demand is made. (3) If by a subsequent written agreement, all parties to a real estate transaction authorize the broker maintaining trust money to disburse the trust money in a manner not in accordance with the agreement under which the money was received, the broker must pay the trust money to the party or parties entitled to the money under the subsequent written agreement within a reasonable time, which the Commission has determined to be not later than the 30th day after the date the broker receives the subsequent written agreement. (4) The broker must immediately notify all parties in writing of any disbursement of trust money. (5) If the broker cannot reasonably determine to which party or parties the trust money should be paid, the broker may pay the trust money into the registry of a court and interplead the parties. (e) Records. A broker must maintain all documentation regarding a trust account for four years from the date the document is received or created by the broker. Page 2 of 2
TEXAS REAL ESTATE COMMISSION DOUGLAS E. OLDMIXON, ADMINISTRATOR Agenda Item 30: Discussion and possible action regarding the Agency Strategic Plan for FY 2015-2019 To be presented at meeting. Agenda Item 31: Discussion and possible action regarding salary level of TREC Administrator To be presented at meeting.
TEXAS REAL ESTATE COMMISSION DOUGLAS E. OLDMIXON, ADMINISTRATOR Agenda Item 32: Discussion and possible action regarding FY 2015 TREC draft budget To be presented at meeting. Agenda Item 33: Discussion and possible action to approve a new addendum for Reverse Mortgage Financing Approval form for voluntary use. The Broker Lawyer Committee recommends that the Commission approve a new Reverse Mortgage Financing Addendum as a voluntary form available for use by licensees. Neither Paragraph 4 regarding financing in the contract forms nor the Third Party Financing Addendum adequately address this type of financing which is increasing in the marketplace. Staff Recommendation: Approve form as presented. Recommended Motion: MOVED, that the Commission approves the new form OP-N, Reverse Mortgage Financing Addendum, for voluntary use, as submitted with any technical and nonsubstantive changes.
As of March 31, 2014 Staff & Support Services Division TREC FY2015 Proposed Operating Budget Proposed to the Budget Committee April 2014 Expended Expended Budget FY2014 Estimated Exp Budget Budget Budget Variance Expenditure Category FY2012 FY2013 FY2014 through 8/31/14 FY2015 FY2016 FY2014 to FY2015 Comments Salaries & Wages $3,996,249 $4,126,542 $4,474,661 $4,266,458 $4,633,632 $4,633,632 $158,971 FY15 Salary budget includes merits and salary adjustments Employee Benefits 1,324,284 1,412,177 1,525,340 1,583,159 1,781,832 1,781,832 256,492 Retiree insurance and add'l payroll retirement contribution Other Personnel Costs 205,789 155,329 257,250 257,250 258,275 258,275 1,025 Professional Services 207,348 162,221 377,800 392,865 300,375 300,375 (77,425) Increases to one time merits, per diem, unemployment; longevity, lump sum pmts FY15 decrease due to reductions for web redesign, CPA svcs, and EEO training Consumables 27,444 22,784 30,000 30,000 30,000 30,000 0 Utilities 9,653 10,632 15,010 15,010 13,101 13,101 Moved budget for telecom parts & supplies to (1,909) Supplies & Equipment line item for FY15 Travel 40,639 26,150 55,700 55,700 58,800 58,800 3,100 Increased travel for Directors and Attorneys Office Rent 458,079 459,457 355,078 179,155 179,605 179,605 (175,473) Rent expense reduced due to offset of SWCAP costs related to leased space Equipment Rental 27,048 25,118 17,135 22,348 23,600 23,600 6,465 Increase for copier that was underbudgeted in FY14 Registration & Membership 13,059 21,456 19,815 23,434 28,910 28,910 9,095 Increased for training and conferences Maintenance & Repairs 75,061 110,915 131,861 134,579 126,774 126,774 Decrease for Exchange Conversion, Sharepoint (5,087) software, printer repair Reproduction & Printing 2,062 534 4,000 4,000 2,200 2,200 Decrease envelopes, business cards, and complaint (1,800) status postcards Contract Services 51,939 39,732 55,907 55,995 54,600 54,600 Moved courier service to Other Operating Expense (1,307) line item Postage 26,595 16,420 28,200 28,200 18,000 18,000 (10,200) Reduced postage Supplies & Equipment 23,012 85,825 98,375 117,816 158,475 108,475 60,100 Increase for ipads, telecom parts moved from Utilities, equipment for website redesign project, SFA Conf Rm. 170 Audio Visual update Communication Services 38,960 30,929 38,240 40,496 45,086 45,086 6,846 Increase for Westlaw; IT file hosting dropbox Other Operating Expenses 11,154 9,620 19,909 19,909 21,658 21,658 1,749 FY14 TTSTC banking fees; Courier service (previously budgeted under Contract Svcs) DPS Criminal History Background Checks 2,254 13 3,000 3,000 2,000 2,000 (1,000) Reduced due to historical activity Capital Expenditures 0 0 0 0 0 Master Lease Purchase Program 15,377 0 0 0 0 Statewide Cost Allocation Plan (SWCAP) 50,673 44,382 52,000 229,541 230,000 230,000 178,000 Increase due to SWCAP calculation Contribution to General Revenue 720,000 720,000 720,000 720,000 720,000 720,000 0 Total Expenditures $7,326,681 $7,480,236 $8,279,281 $8,178,915 $8,686,923 $8,636,923 $407,642 FY2015 budget increase from FY2014 TREC FY2015 Proposed Operating Budget
Staff & Support Services Division TREC FY2015 Proposed Operating Budget Proposed to the Budget Committee April 2014 Revenue FY2012 Revenue FY2013 Revenue FY2014 Projected FY2014 Est Revenue through 8/31/14 FY2015 Projected FY2016 Projected Comments License Fees $8,606,849 $8,877,430 $8,529,027 $8,718,582 $8,916,500 $8,649,005 Other Miscellaneous Revenue 288,863 351,576 162,920 108,085 241,645 234,396 Exam fee $10 for FY15 (Pearson Vue), NSF fees. Total Revenue $8,895,712 $9,229,006 $8,691,947 $8,826,667 $9,158,145 $8,883,401 Revenue Over/(Under) Expenditures & Transfers $1,569,031 $1,748,770 $412,666 $647,752 $471,222 $246,478 Note - TX Online& FBI Criminal History Background Checks are pass throughs; i.e., whatever we collect is only for that purpose. Therefore, those revenues are not reflected on the budget. Projection of Cash Balances Source USAS Cash Bal Cash Available 3/1/14 - Trust Account 3,622,039 Trust Acct Statement-3055 @ 3/1/14 Appn Rev Cash Available 3/1/14 - USAS (Treasury) 540,540 USAS Profile 56 (GL 0045), 62 & 67 00000 819 March Accrued Revenue in 3054-Due to 3055 809,354 13001 80,496 Total Cash Available at 3/1/14 4,971,933 13002 125,938 13004 82,923.00 Projected Future Activity 13800 112,956.00 Projected Revenue 3/1/14-8/31/14 3,661,751 FY2015 Budget Worksheet 00010 33,635.00 Accounts Payable & Projected Expenditures (4,086,400) FY2015 Budget Worksheet 00029 31,060.00 00030 72,713.00 540,540 Projected Net Activity 3/1/14-8/31/14 (424,649) Projected Cash Balance August 31, 2014 4,547,284 FY2015 Activity: Projected Revenue 9,158,145 Projected Expenditures (8,686,923) Projected Net Activity - FY2015 471,222 Projected Cash Balance August 31, 2015 5,018,506 TREC FY2015 Proposed Operating Budget