Chapter 224 Oregon Laws 2003

AN ACT

HB 2639

Relating to affordable housing; amending ORS 696.241 and 696.578.

The Legislative Assembly finds that:

(1) There is a social and economic need to ensure an adequate supply of affordable housing for Oregonians.

(2) Home ownership contributes to community responsibility, economic stability, family security and personal well-being.

(3) A voluntary program utilizing the interest generated on earnest money and escrow accounts can help to ensure an adequate supply of affordable housing.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 696.241 is amended to read:

696.241. (1) Each real estate broker who is a sole practitioner and each principal real estate broker shall maintain in this state one or more separate bank accounts that shall be designated a Clients’ Trust Account in which all trust funds received or handled by the broker and the real estate licensees subject to the supervision of the broker on behalf of any other person shall be deposited unless, pursuant to written agreement of all parties having an interest in the trust funds, the trust funds are immediately placed in a neutral escrow depository in this state.

(2) Each real estate broker or principal real estate broker shall file with the Real Estate Agency, on forms approved by the Real Estate Commissioner, a statement identifying the name of the bank or banks, account number or account numbers, and name of account or accounts for each Clients’ Trust Account maintained.

(3) Each real estate broker or principal real estate broker shall authorize the agency, by a form approved by the commissioner, to examine any Clients’ Trust Account, by a duly authorized representative of the agency. The examination shall be made at such times as the commissioner may direct.

(4) If a real estate broker or principal real estate broker maintains a separate Clients’ Trust Account in a branch office, a separate bookkeeping system shall be maintained in the branch office, provided a copy of the records required by the provisions of ORS 696.280 are maintained in the main office of the broker.

(5) Trust funds received by a real estate broker or principal real estate broker may be placed by the broker in a federally insured interest-bearing bank account, designated a Clients’ Trust Account, but only with the prior written approval of all parties having an interest in the trust funds. The earnings of such interest-bearing account shall not inure to the benefit of the real estate broker or principal real estate broker unless expressly approved in writing before deposit of the trust funds by all parties having an interest in the trust funds.

(6) With prior written notice to all parties who have an interest in the trust funds, a real estate broker or principal real estate broker may place trust funds received by the real estate broker or principal real estate broker in a federally insured interest-bearing bank account that is designated a Clients’ Trust Account and the earnings of which inure to the benefit of a public benefit corporation, as defined in ORS 65.001, for distribution to organizations and individuals for first-time homebuying assistance and for development of affordable housing. The real estate broker or principal real estate broker shall select a qualified public benefit corporation to receive the interest earnings.

[(6)] (7) A real estate broker or principal real estate broker is not entitled to any part of any interest earnings on trust funds deposited under subsection (5) of this section or to any part of the earnest money or other money paid to the broker in connection with any real estate transaction as part or all of the broker’s commission or fee until the transaction has been completed or terminated. The question of the disposition of forfeited earnest money shall be negotiated between the real estate broker or principal real estate broker and the seller at the time of executing any listing agreement or earnest money agreement. The result of such negotiation shall be filled in on the agreement form at the time of signing by the seller and either separately initialed by the seller or placed immediately above the signature of the seller.

[(7)] (8) Clients’ Trust Account funds are not subject to execution or attachment on any claim against a real estate broker or principal real estate broker.

[(8)] (9) No person shall knowingly keep or cause to be kept any funds or money in any bank under the heading of Clients’ Trust Account or any other name designating such funds or money as belonging to the clients of any real estate broker or principal real estate broker, except actual trust funds deposited with the broker.

[(9)] (10) The agency may provide by rules for other records to be maintained and for the manner in which trust funds are deposited, held and disbursed.

SECTION 2. ORS 696.578 is amended to read:

696.578. (1) All money deposited in escrow to be delivered upon the close of the escrow or upon any other contingency shall be deposited and maintained in a bank within this state and kept separate, distinct and apart from funds belonging to the escrow agent. Such funds, when deposited, are to be designated as trust funds, escrow accounts, or under some other appropriate name indicating that the funds are not the funds of the escrow agent.

(2) Trust funds received by an escrow agent may be placed by the agent in a federally insured interest-bearing bank account, designated a clients’ trust account, but only with the prior written approval of all parties having an interest in the trust funds. The earnings of such interest-bearing account may inure to the benefit of the escrow agent if expressly approved in writing before deposit of the trust funds by all parties having an interest in the trust funds.

(3) With prior written notice to all parties who have an interest in the trust funds, an escrow agent may place trust funds received by the escrow agent in a federally insured interest-bearing bank account that is designated a clients’ trust account and the earnings of which inure to the benefit of a public benefit corporation, as defined in ORS 65.001, for distribution to organizations and individuals for first-time homebuying assistance and for development of affordable housing. The escrow agent shall select a qualified public benefit corporation to receive the interest earnings.

[(3)] (4) Any bank services, as defined by rule by the Real Estate Commissioner, provided to the escrow agent shall not be considered to affect the impartiality or neutrality of the escrow agent. Such services are permitted with approval in the written closing instructions of the principals.

[(4)] (5) Clients’ trust funds may be invested in secured obligations of the United States, if:

(a) The depositing principal gives prior written approval to the escrow agent for such investment after receiving written disclosure as may be required by rule adopted by the commissioner;

(b) The depositing principal releases the escrow agent from any liability for loss of such funds;

(c) The depositing principal agrees that any loss of funds shall not be a claim against the bond or deposit of the agent under ORS 696.525 and 696.527; and

(d) The escrow agent does not have any interest in the investment or earnings from the investment.

[(5)] (6) If the funds to be invested represent earnest money in a transaction, both principals in the transaction must give prior written approval for the investment and are both considered depositing principals.

Filed in the office of Secretary of State June 4, 2003

Effective date January 1, 2004

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