Questions and Answers
What is the requirement for property managers who own less than 100 percent of the real estate regarding rents?
How long must property managers retain trust account records after a property management agreement is terminated?
What must property managers do within five business days of terminating a property management agreement and holding tenant funds?
Which of the following statements is true regarding the trust account for property managers?
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Which of the following is NOT a requirement for maintaining trust account records?
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Which characteristic is NOT required for trust accounts according to trust accounting laws?
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What is the maximum amount of personal funds a property manager is allowed to hold in a trust account?
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Property managers are responsible for which of the following regarding trust accounts?
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Which statement about trust funds is true?
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What is the required action for property managers regarding deposited monies belonging to others?
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Study Notes
Trust Accounts Overview
- Property managers are required to deposit any received deposits, rent payments, or other funds into a trust account as per Montana law.
- Trust accounts must be maintained according to specific criteria, including being liquid, accessible, insured, and identified as trust accounts.
Trust Account Requirements
- Monthly reconciliation of trust accounts is mandatory to ensure accuracy.
- Funds cannot be placed in sweep accounts or risky investments (e.g., certificates of deposit).
- Property managers can maintain multiple trust accounts but are accountable for all funds in these accounts.
Funds Management
- Monies belonging to others must be deposited within three business days unless otherwise stated in agreements.
- Interest-bearing accounts are permissible if the interest is designated as property manager compensation.
- Property managers may hold up to $1,000 of personal funds in the trust account for specific expenses, but this must be withdrawn within ten business days when due.
Security Deposits and Rent Handling
- Security deposits must be placed in a trust account when managing one's own real estate.
- Property managers owning all of the real estate do not need to put rents in trust accounts but may choose to do so.
- If owning less than 100% of real estate, all rents must be placed in trust accounts, with disbursements detailed in property management agreements.
Record Keeping
- Comprehensive, chronological records of trust account activity are essential, including personal funds.
- Each record must maintain a running balance and identify transaction details such as dates, parties, amounts received, and disbursed.
Termination Procedures
- Upon termination of property management agreements, the property manager must notify tenants in writing within five business days and outline the transfer of funds and files within 30 days.
- A notification must include the name and contact information of the new responsible party.
Documentation Retention
- Trust account records and related documentation must be maintained for at least eight years post-termination, regardless of business cessation or sale.
- Records should facilitate auditing to ensure compliance with trust account regulations.
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Day 3 Test
