New Way to Handle Disputed Trust Monies
Newly enacted G.S. 93A-12 provides another way for brokers to lawfully rid their trust accounts of trusted monies where the parties to the dispute refuse to come to an agreement or refuse to initiate a legal action to determine who is entitled to the monies. This new law became effective October 1, 2005, and brokers may begin utilizing this process anytime thereafter.
This law applies to disputed trust monies in dispute prior to October 1, 2005.
The following procedure may be used for “any disputed funds received by a licensee acting in a fiduciary capacity except residential tenant security deposits.” The basic premise is that the security deposit belongs to the tenant, and not the landlord. Tenants security deposits are addressed in G.S. 42-41.
Procedure:
1) Notice must be delivered to the person or sent “…by first class mail, postpaid, properly addressed to the person at the person’s last known address.” If you are a REALTOR, the North Carolina Association of REALTORS Legal Counsel is in the process of writing a standard notice form which REALTORS may utilize. Non-REALTORS may consult an attorney to prepare this notice.
2) After the broker has notified all parties claiming ownership of or entitlement to the monies in writing that the broker intends to pay the monies to the Clerk of Court 90 days following the notice, the parties may initiate a special proceeding with the Clerk of Court to recover the disputed funds within one year following the deposit with the Clerk of Court. Remember, the broker is to pay the monies to the Clerk of Court in the COUNTY where the property is located, not necessarily where the parties live or where the real estate office is located.
3) When the broker deposits the disputed funds with the Clerk of Court, s/he must “certify” to the Clerk that notice was given to all parties at least 90 days prior to depositing the funds with the Clerk.
Once the broker gives the required notice to all parties and properly follows the procedure to deposit the funds with the Clerk of Court, the broker’s responsiblity is OVER! If any party files a special proceeding with the Clerk within one year of the funds being deposited, then the Clerk will proceed to hear the case, determine “rightful ownership” and disburse the funds. If no party initiates a special proceeding with the Clerk within one year of the monies being deposited with the Clerk, then the Clerk is to escheat the funds to the State Treasurer.Superior School of Real Estate is owned by Bill Gallagher, North Carolina’s “superior” Real Estate Instructor. Superior School of real Estate offers post & pre-licensing course as well as continuing education courses in Asheboro, Burlington, Charlotte, Greensboro, Lake Norman, Pineville, Raleigh, Statesville & Winston Salem. Classes are offered on Weekends, Weekdays, & Evenings.
After 22 years working in real estate, Bill Gallagher has become one of the most distinguished instructors in North Carolina. Bill has a long history of providing superior education to his students. Bill has taught countless courses in Broker Prelicense, Salesperson Prelicense, and Continuing Education.
