New Requirements For California Broker-Owned Escrows
Tuesday, January 07, 2014
On the day that this is being written, California real estate brokers who operate an escrow company under their real estate license have 56 days remaining in which to file electronically form RE 890 Escrow Activity Report with the Bureau of Real Estate. It is a fair bet that more than a few affected brokers do not know this. No one has ever before had to file an escrow activity report with the BRE or its predecessor in name, the Department of Real Estate. The Escrow Activity Report is the creation of fairly recent legislation.
On October 9, 2011, the Governor signed into law Senate Bill 53 Calderon. That bill added section 10141.6 to the Business and Professions Code. It sets forth requirements on real estate brokers who engage in escrow activities pursuant to their real estate broker license and not under the Department of Corporations. Such brokers must file an annual report with the BRE if they conducted five or more escrows or if their escrow activities equaled or exceeded 1 million. The report is to be filed within 60 days following the completion of the calendar year. It is to document the number of escrows conducted and the dollar volume escrowed. The report "shall be made on a form acceptable to the [Real Estate] commissioner. The law became effective July 1, 2012.
The fall 2012 Real Estate Bulletin reported the above facts. The article also noted that, "Broker escrow activity reports must be filed electronically through the DRE [now BRE] Web site." Readers were advised to watch the DRE News Flash for updates on the availability of the report.
In July of 2013, the BRE posted on its Web site a document titled "Escrow Activity Report - Frequently Asked Questions". The FAQ contained further information about the activity report. In addition to reporting the threshold numbers number of escrows and dollar volume, the form also requires i locations of the escrow offices, ii information about the escrow officers, and iii information about the broker-held escrow trust accounts. The latter category asks for names of signatories, account numbers, and financial institution identification.
None of the additional information was required by the legislation or by section 10146.1 of the Business and Professions Code. However, the law does require that the report shall be made on a form acceptable to the commissioner; and the commissioner evidently wants the information.
The penalty for not filing the Escrow Activity Report RE 890 within the time specified is a penalty of 50 per day for each day up to and including the 30th day after the deadline. On and after the 31st day, the penalty shall be 100 per day, not to exceed a total penalty of 10,000. Failure to pay any penalty due may result in suspension or revocation of the brokers license.
Brokers may find the form and electronically file by going to the BRE web site and searching for escrow activity report.
Bob Hunt is a director of the California Association of Realtors. He is the author of Real Estate the Ethical Way.
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