2830. Broker Placement of Trust Funds with Financial Institutions.
The relationship between a real estate broker and a client for whom the broker holds funds in trust is an agency
relationship. As an agent, the broker owes a fiduciary duty to the client regarding the handling of the trust. Any benefit
received by the broker relating to the broker's handling of client funds in trust belongs to the client by law, and the
broker must pass that benefit along to the client.

(a) Unless in possession of written permission from the client, it is unlawful for any real estate broker, including any
corporate broker, to receive, directly or indirectly, any commission, compensation, or other consideration, whether
personal or professional, from any person or institution other than the client as an inducement for the placement of a
trust fund account in accordance with Section 10145 of the Business and Professions Code. Actual placement of a trust
fund account is not a precondition to a violation of this section, whether the violation is or is not a per se violation
pursuant to subsection (c), below.
(b) For purposes of this section, a "compensating balance" is a balance maintained in a checking account or other
account in a bank or other recognized depository in the name of a real estate broker for the purpose of paying bank fees
on a separate trust fund account.
(c) Unless in possession of written permission from the client as described in subsection (a), the following activities,
whether performed directly or indirectly, are deemed per se receipt of inducements for the placement of trust account
business by any person and are unlawful:
(1) Receiving or requesting payment for, accepting or requesting provision of, or accepting or requesting assistance
with business expenses, including, but not limited to, rent, employee salaries, furniture, copiers, facsimile machines,
automobiles, telephone services or equipment, or computers.
(2) Receiving or requesting receipt of any form of consideration intended for the benefit of the broker, rather than
the trust account itself, including cash, below market rate loans, automobile charges, or merchandise or merchandise
credits.
(3) Receiving or requesting to receive on behalf of the broker or corporation, compensating balances or benefits in
the pricing or fees for the maintenance of a compensating balance account.
(4) Receiving or requesting provision of all, or any part, of the time or productive effort of any employee of the
bank or other recognized depository for any service unrelated to the trust account.

(5) Receiving or requesting expenditures for food, beverages, and entertainment.
(d) Receipt or request of receipt of the following are not deemed to be unlawful or in violation of this section:



(1) Promotional items with a permanently affixed company logo of the bank or other recognized depository with a
value of not more than ten dollars ($10) each. "Promotional item" does not include a gift certificate, gift card, or
other item that has a specific monetary value on its face, or that may be exchanged for any other item having a
specific monetary value.
(2) Receipt or requested receipt of education or educational materials exclusively related to the business of trust
fund management if continuing education credits are not provided.
(e) The receipt or requested receipt of any form of consideration as an inducement for the placement of a trust account
not specifically set forth in this section shall not be presumed lawful merely because it is not specifically prohibited.

2830.1. Interest-Bearing Trust Account.
A real estate broker, when acting as agent for a financial institution as beneficiary of a loan, may deposit and maintain
funds from or for the account of an obligor for the future payment of property taxes, assessments or insurance relating
to real property containing only a one-to-four family residence, in an interest-bearing trust account in a bank or savings
and loan association in order to pay interest to the obligor in accordance with Section 2954.8 of the Civil Code if the
following requirements are met:
(a) The account is in the name of the broker as trustee.

(b) All of the funds in the account are covered by insurance provided by an agency of the federal government.
(c) All of the funds in the account are funds held in trust by the broker for others.
(d) The broker discloses to the obligor how interest will be calculated and paid.
(e) No interest earned on the funds shall inure directly or indirectly to the benefit of the broker nor to any person licensed
to the broker.

2831. Trust Fund Records To Be Maintained.
(a) Every broker shall keep a record of all trust funds received, including uncashed checks held pursuant to instructions
of his or her principal. This record, including records maintained under an automated data processing system, shall set
forth in chronological sequence the following information in columnar form:

(1) Date trust funds received.
(2) From whom trust funds received.
(3) Amount received.
(4) With respect to funds deposited in an account, date of said deposit.

(5) With respect to trust funds previously deposited to an account, check number and date of related disbursement.
(6) With respect to trust funds not deposited in an account, identity of other depository and date funds were
forwarded.
(7) Daily balance of said account.
(b) For each bank account which contains trust funds, a record of all trust funds received and disbursed shall be
maintained in accordance with subdivision (a) or (c).
(c) Maintenance of journals of account cash receipts and disbursements, or similar records, or automated data processing
systems, including computer systems and electronic storage and manipulation of information and documents, in
accordance with generally accepted accounting principles, shall constitute compliance with subdivision (a) provided
that such journals, records, or systems contain the elements required by subdivision (a) and that such elements are
maintained in a format that will readily enable tracing and reconciliation in accordance with Section 2831.2.
(d) Nothing in this section shall be construed to permit a violation of Section 10145 of the Code.
(e) A broker is not required to keep records pursuant to this section of checks which are written by a principal, given to
the broker and made payable to third parties for the provision of services, including but not limited to escrow, credit
and appraisal services, when the total amount of such checks for any transaction from that principal does not exceed
$1,000. Upon request of the Bureau or the maker of such checks, a broker shall account for the receipt and distribution
of such checks. A broker shall retain for three years copies of receipts issued or obtained in connection with the receipt
and distribution of such checks.

2831.1. Separate Record for Each Beneficiary or Transaction.
(a) A broker shall keep a separate record for each beneficiary or transaction, accounting for all funds which have been
deposited to the broker’s trust bank account and interest, if any, earned on the funds on deposit. This record shall include
information sufficient to identify the transaction and the parties to the transaction. Each record shall set forth in
chronological sequence the following information in columnar form:

(1) Date of deposit.
(2) Amount of deposit.
(3) Date of each related disbursement.

(4) Check number of each related disbursement.
(5) Amount of each related disbursement.
(6) If applicable, dates and amounts of interest earned and credited to the account.

(7) Balance after posting transactions on any date.
(b) Maintenance of trust ledgers of separate beneficiaries or transactions, or similar records, or automated data
processing systems, including computer systems and electronic storage and manipulation of information and documents,
in accordance with generally accepted accounting principles will constitute compliance with subdivision (a), provided
that such ledgers, records, or systems contain the elements required by subdivision (a) and that such elements are
maintained in a format that will readily enable tracing and reconciliation in accordance with Section 2831.2.

2831.2. Trust Account Reconciliation.
The balance of all separate beneficiary or transaction records maintained pursuant to the provisions of Section 2831.1
must be reconciled with the record of all trust funds received and disbursed required by Section 2831, at least once a
month, except in those months when the bank account did not have any activities. A record of the reconciliation must
be maintained, and it must identify the bank account name and number, the date of the reconciliation, the account
number or name of the principals or beneficiaries or transactions, and the trust fund liabilities of the broker to each of
the principals, beneficiaries or transactions.

2832. Trust Fund Handling.
(a) Compliance with Section 10145 of the Code requires that the broker place funds accepted on behalf of another into
the hands of the owner of the funds, into a neutral escrow depository or into a trust fund account in the name of the
broker, or in a fictitious name if the broker is the holder of a license bearing such fictitious name, as trustee at a bank or
other financial institution not later than three business days following receipt of the funds by the broker or by the
broker’s salesperson.

(b) Except as expressly provided by subdivision (d) of Section 10145 of the Code or by a regulation in this article, the
account into which the trust funds are deposited shall not be an interest-bearing account for which prior written notice
can by law or regulation be required by the financial institution as a condition to the withdrawal of funds.
(c) A check received from the offeror may be held uncashed by the broker until acceptance of the offer if

(1) the check by its terms is not negotiable by the broker or if the offeror has given written instructions that the
check shall not be deposited nor cashed until acceptance of the offer and
(2) the offeree is informed that the check is being so held before or at the time the offer is presented for acceptance.

(d) In these circumstances if the offeror’s check was held by the broker in accordance with subdivision (c) until
acceptance of the offer, the check shall be placed into a neutral escrow depository or the trust fund account, or into the
hands of the offeree if offeror and offeree expressly so provide in writing, not later than three business days following
acceptance of the offer unless the broker receives written authorization from the offeree to continue to hold the check.

(e) Notwithstanding the provisions of subdivisions (a) and (d), a real estate broker who is not licensed under the Escrow
Law (Section 17000, et seq., of the Financial Code) when acting in the capacity of an escrow holder in a real estate
purchase and sale, exchange or loan transaction in which the broker is performing acts for which a real estate license is
required shall place all funds accepted on behalf of another into the hands of the owner of the funds, into a neutral
escrow depository or into a trust fund account in the name of the broker, or in a fictitious name if the broker is the holder
of a license bearing such fictitious name, as trustee at a bank or other financial institution not later than the next business
day following receipt of the funds by the broker or by the broker’s salesperson.

2832.1. Trust Fund Handling for Multiple Beneficiaries.
The written consent of every principal who is an owner of the funds in the account shall be obtained by a real estate
broker prior to each disbursement if such a disbursement will reduce the balance of funds in the account to an amount
less than the existing aggregate trust fund liability of the broker to all owners of the funds.

2834. Trust Account Withdrawals.
(a) Withdrawals may be made from a trust fund account of an individual broker only upon the signature of the broker
or one or more of the following persons if specifically authorized in writing by the broker:
(1) a salesperson licensed to the broker.

(2) a person licensed as a broker who has entered into a written agreement pursuant to Section 2726 with the broker.
(3) an unlicensed employee of the broker with fidelity bond coverage at least equal to the maximum amount of the
trust funds to which the employee has access at any time.
(b) Withdrawals may be made from the trust fund account of a corporate broker only upon the signature of:

(1) an officer through whom the corporation is licensed pursuant to Section 10158 or 10211 of the Code; or
(2) one of the persons enumerated in paragraph (1), (2) or (3) of subdivision (a) above, provided that specific
authorization in writing is given by the officer through whom the corporation is licensed and that the officer is an
authorized signatory of the trust fund account.
(c) An arrangement under which a person enumerated in paragraph (1), (2) or (3) of subdivision (a) above is authorized
to make withdrawals from a trust fund account of a broker shall not relieve an individual broker, nor the broker-officer
of a corporate broker licensee, from responsibility or liability as provided by law in handling trust funds in the broker’s
custody.

2835. Commingling.
“Commingling” as used in Section 10176(e) of the Code is prohibited except as specified in this section. For purposes
of Section 10176(e), the following shall not constitute “commingling”:
(a) The deposit into a trust account of reasonably sufficient funds, not to exceed $200, to pay service charges or fees
levied or assessed against the account by the bank or financial institution where the account is maintained.
(b) The deposit into a trust account maintained in compliance with subdivision (d) of funds belonging in part to the
broker’s principal and in part to the broker when it is not reasonably practicable to separate such funds, provided the
part of the funds belonging to the broker is disbursed not later than twenty-five days after their deposit and there is no
dispute between the broker and the broker’s principal as to the broker’s portion of the funds. When the right of a broker
to receive a portion of trust funds is disputed by the broker’s principal, the disputed portion shall not be withdrawn until
the dispute is finally settled.
(c) The deposit into a trust account of broker owned funds in connection with activities pursuant to either subdivision
(d) or (e) of Section 10131 of the Code or when making, collecting payments or servicing a loan which is subject to the
provisions of Section 10240 of the Code provided:

(1) The broker meets the criteria of Section 10232 of the Code.
(2) All funds in the account which are owned by the broker are identified at all times in a separate record which is
distinct from any separate record maintained for a beneficiary.

(3) All broker owned funds deposited into the account are disbursed from the account not later than 25 days after
their deposit.

(4) The funds are deposited and maintained in compliance with subdivision (d).
(5) For the purpose of this section, a broker shall be deemed to be subject to the provisions of Section 10240 of the
Code if the broker delivers the statement to the borrower required by Section 10240.
(d) The trust fund account into which the funds are deposited is maintained in accordance with the provisions of Section
10145 and the regulations of this article.

2836. Subdivider and Broker Records.
(a) (1) A subdivider shall maintain or cause to be maintained, in accordance with accepted accounting practices,
records of all funds received from prospective purchasers or lessees of subdivisions interests.

(2) A subdivider shall maintain or cause to be maintained, in accordance with accepted accounting practices, records
of receipt, deposit and disbursement of all funds collected or obtained in connection with the operation of a
homeowners association
(3) The records shall reflect dates of receipt and disbursement of funds and the names of persons from whom
received and to whom disbursed. The records shall be retained by the subdivider for a period of three years after
the date of receipt or disbursement.
(b) A broker shall maintain or cause to be maintained, in accordance with accepted accounting practices, all trust fund
records described in Section 10148 of the Code.
(c) Such records shall be made available for examination and inspection in California during regular business hours
upon request by the commissioner or his or her designated representative.
Article 16. Mortgage Loan Brokerage