ORS 696.241
Clients’ trust accounts

  • commingling of funds
  • branch trust account
  • interest earnings on trust account
  • when broker entitled to earnest money
  • funds not subject to execution
  • rules

(1)

As used in this section, “trust funds” means money belonging to others that is received or handled by a licensed real estate property manager or principal real estate broker in the course of conducting professional real estate activity and in the real estate licensee’s fiduciary capacity.

(2)

A licensed real estate property manager, or a principal real estate broker who engages in the management of rental real estate, shall open and maintain in this state one or more separate federally insured bank accounts that are designated clients’ trust accounts under ORS 696.245 (Clients’ trust accounts). A principal real estate broker who engages in the management of rental real estate or a licensed real estate property manager shall deposit in a clients’ trust account all trust funds received or handled by the principal real estate broker, licensed real estate property manager or real estate licensees subject to the supervision of the principal real estate broker.

(3)

Intentionally left blank —Ed.

(a)

A principal real estate broker who receives or handles trust funds and does not deposit the trust funds in a licensed neutral escrow depository as described in paragraph (b) of this subsection shall open and maintain in this state one or more separate federally insured bank accounts that are designated clients’ trust accounts under ORS 696.245 (Clients’ trust accounts). Pursuant to written agreement of all parties to a real estate transaction having an interest in the trust funds, the principal real estate broker shall immediately place the trust funds in a clients’ trust account.

(b)

A principal real estate broker may deposit trust funds in a licensed neutral escrow depository in this state.

(4)

A principal real estate broker or licensed real estate property manager who opens a clients’ trust account under subsection (2) or (3) of this section, or to whom ownership of a clients’ trust account is transferred, is liable for all deposits and disbursements made using the clients’ trust account until the principal real estate broker or licensed real estate property manager closes the account or transfers ownership of the account.

(5)

A principal real estate broker or licensed real estate property manager may not commingle any other funds with the trust funds held in a clients’ trust account, except for:

(a)

Earned interest on a clients’ trust account as provided in subsections (7) and (8) of this section; and

(b)

Earned compensation as provided in subsection (9) of this section.

(6)

If a licensed real estate property manager or principal real estate broker maintains a separate clients’ trust account in a branch office, a separate bookkeeping system must be maintained in the branch office and a copy of the records required under ORS 696.280 (Records of licensed real estate property managers and real estate brokers) must be maintained in the main office of the licensed real estate property manager or principal real estate broker.

(7)

Trust funds received by a licensed real estate property manager or principal real estate broker may be deposited by the licensed real estate property manager or principal real estate broker in a federally insured interest-bearing bank account that is designated a clients’ trust account under ORS 696.245 (Clients’ trust accounts), but only with the prior written approval of all parties who have an interest in the trust funds. The earnings of the interest-bearing account inure to the benefit of the licensed real estate property manager or principal real estate broker only if expressly approved in writing by all parties who have an interest in the trust funds before deposit of the trust funds.

(8)

With prior written notice to all parties who have an interest in the trust funds, a principal real estate broker may place trust funds received by the principal real estate broker in a real estate sales, purchase or exchange transaction in a federally insured interest-bearing bank account that is designated a clients’ trust account under ORS 696.245 (Clients’ trust accounts), the earnings of which inure to the benefit of a public benefit corporation, as defined in ORS 65.001 (Definitions), for distribution to organizations and individuals for first-time homebuying assistance and for development of affordable housing. The principal real estate broker shall select a qualified public benefit corporation to receive the interest earnings.

(9)

In connection with a real estate sales, purchase or exchange transaction, a principal real estate broker is not entitled to any part of any interest earnings on trust funds deposited under subsection (7) of this section or to any part of the earnest money or other money paid to the principal real estate broker as part or all of the principal real estate broker’s compensation until the transaction has been completed or terminated. The principal real estate broker and the seller shall negotiate and agree in writing to the disposition of forfeited earnest money at the time of execution by the seller of any listing agreement or earnest money agreement. An agreement about the disposition of forfeited earnest money must be initialed by the seller or immediately precede the seller’s signature.

(10)

Trust funds in a clients’ trust account are not subject to execution or attachment on any claim against a licensed real estate property manager or principal real estate broker.

(11)

The Real Estate Agency by rule shall establish an optional procedure by which a principal real estate broker may elect to disburse disputed funds held in relation to the sale, exchange or purchase of real estate from a clients’ trust account to the person who delivered the funds to the principal real estate broker. The procedure must allow disbursal not more than 20 days after a request is made for the disbursal. A disbursal pursuant to the procedure does not affect the claim of any other person to the funds.

(12)

The agency may provide by rule for other records to be maintained and for the manner in which trust funds are deposited, held and disbursed. The rules adopted under this subsection may include requirements for interest or compensation held in a clients’ trust account pursuant to subsection (5) of this section to be disbursed from the clients’ trust account to a licensed real estate property manager or principal real estate broker.

(13)

A real estate licensee who, for the purpose of transmitting a check, receives the check from a buyer or tenant that is payable to a property owner or seller is exempt from the deposit requirements of subsections (2) and (3) of this section. The agency may determine by rule the records that must be maintained for checks received as described in this subsection and the manner in which the checks must be transmitted. [1975 c.746 §18 (enacted in lieu of 696.240); 1977 c.649 §39; 1981 c.617 §11a; 1985 c.589 §4; 1991 c.5 §37; 2001 c.300 §21; 2003 c.224 §1; 2005 c.116 §18; 2005 c.393 §2a; 2007 c.224 §1; 2007 c.319 §9; 2007 c.337 §4; 2009 c.224 §5; 2009 c.324 §5; 2011 c.158 §4; 2013 c.145 §13; 2017 c.234 §15]

Source: Section 696.241 — Clients’ trust accounts; commingling of funds; branch trust account; interest earnings on trust account; when broker entitled to earnest money; funds not subject to execution; rules, https://www.­oregonlegislature.­gov/bills_laws/ors/ors696.­html.

See also annotations under ORS 696.240 in permanent edition.

Notes of Decisions

Since purpose of this section is to prevent abuses arising from commingling of funds entrusted to brokers with brokers’ other funds, “neutral escrow depository” means an escrow depository other than a broker, but includes escrow depositories owned or controlled by a broker. Banif Corp. v. Black, 12 Or App 385, 507 P2d 49 (1973)

Broker was not guilty of “conversion” of down payment where clear evidence showed broker complied with statutory requirements by depositing down payment made by purchaser in trust fund account. Huszar v. Certified Realty Co., 278 Or 29, 562 P2d 1184 (1977)

696.007
Statement of legislative purpose 696.010
Definitions 696.015
Legislative finding 696.020
License required for individuals engaged in professional real estate activities 696.022
Licensing system for real estate brokers and property managers 696.024
Payments due and owing to Real Estate Agency 696.026
Registration and renewal of business names 696.030
Exemptions 696.040
Single act sufficient to constitute professional real estate activity 696.110
Exclusive nature of regulation of real estate licensees 696.125
Limited license 696.130
Effect of revocation of license 696.174
License renewal 696.182
Continuing education 696.184
Duties of continuing education provider 696.186
Qualifications of continuing education instructors 696.200
Main office 696.205
Death or incapacity of sole principal real estate broker or sole licensed real estate property manager 696.232
License status of employee of agency 696.241
Clients’ trust accounts 696.243
Substituting copy for original canceled check allowed 696.245
Clients’ trust accounts 696.255
Nonresident license equivalent to appointment of commissioner as agent for service of process 696.265
Recognition of nonresident real estate licensee 696.270
Fees 696.280
Records of licensed real estate property managers and real estate brokers 696.290
Sharing compensation with or paying finder’s fee to unlicensed person prohibited 696.292
Limitation on demand for compensation 696.294
Opinion letter 696.301
Grounds for discipline 696.310
Intracompany supervision and control 696.315
Prohibition against licensee permitting nonlicensed individual to engage in activity with or on behalf of licensee 696.320
Effect of suspension or revocation of principal broker license on associated licensees 696.323
Effect of violations by real estate licensee on associated licensees 696.363
Relationship between licensees as independent contractors or employer and employee 696.365
City or county business license tax 696.375
Real Estate Agency 696.385
Power of agency 696.392
Power of commissioner to administer oaths, take depositions and issue subpoenas 696.395
Power of commissioner 696.396
Investigation of complaints and progressive discipline 696.397
Cease and desist order 696.398
Delegation by commissioner to employees 696.405
Real Estate Board 696.415
Officers 696.425
Powers and duties of board 696.430
Records of commissioner as evidence 696.445
Advancement of education and research 696.490
Real Estate Account 696.495
Revolving fund 696.505
Definitions for ORS 696.505 to 696.590 696.508
Legislative finding 696.511
License requirement 696.520
Application of ORS 696.505 to 696.590 696.523
Application of ORS 696.505 to 696.590 to title insurance activities 696.525
Bond for escrow agents 696.527
Deposits in lieu of bond 696.530
Expiration and renewal of license 696.532
Limited license 696.534
Records of escrow agents 696.535
Grounds for refusing, suspending or revoking license or reprimanding licensee 696.541
Authority of commissioner over escrow agents 696.545
Investigation 696.555
Commissioner to take possession of property and assets of escrow agent when assets or capital impaired 696.570
Hearings procedure under ORS 696.505 to 696.590 696.575
Civil or criminal actions not limited by ORS 696.505 to 696.590 696.577
Commissioner’s order against unlicensed agent 696.578
Deposit and designation of funds held in escrow 696.579
Funds exempt from execution or attachment 696.581
Written escrow instructions or agreement required 696.582
Escrow agent to hold certain compensation 696.585
Civil penalties 696.590
Penalty amounts 696.600
Definitions for ORS 696.392, 696.600 to 696.785 and 696.995 696.603
License requirement 696.606
Real estate marketing organization license 696.609
Exemptions from ORS 696.392, 696.600 to 696.785 and 696.995 696.612
Grounds for disciplinary action 696.615
Publication of sanctions imposed for violations 696.618
Denial of right to court action for unlicensed real estate marketing organization 696.621
Real Estate Marketing Account 696.624
Consent by nonresident real estate marketing organization to service of summons or process required 696.627
On-site inspection allowed 696.710
Necessity of alleging license in action to collect compensation 696.720
Remedies are concurrent 696.730
Jurisdiction of courts for violations 696.775
Authority of commissioner when license lapsed, expired, revoked, suspended or surrendered 696.785
Commissioner duties when illegal commingling of funds found 696.790
Authority of commissioner to require fingerprints 696.795
Authority of commissioner to conduct investigations and proceedings 696.800
Definitions 696.805
Real estate licensee as seller’s agent 696.810
Real estate licensee as buyer’s agent 696.815
Representation of both buyer and seller 696.820
Agency disclosure pamphlet 696.822
Liability of principal for act, error or omission of agent or subagent 696.835
Buyer and seller responsibilities 696.840
Compensation and agency relationships 696.845
Acknowledgment of existing agency relationships form 696.855
Common law application to statutory obligations and remedies 696.870
Duties of real estate licensee under ORS 105.462 to 105.490, 696.301 and 696.870 696.880
Licensee not required to disclose proximity of registered sex offender 696.890
Duties of real estate property managers 696.990
Penalties 696.995
Civil penalties for violation of ORS 696.603, 696.606 or 696.612
Green check means up to date. Up to date

Current through early 2024

§ 696.241’s source at oregon​.gov