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Your Money In Trust in Nevada ... A Trust Account ... What Should You Expect?

Reblogger
Real Estate Agent with RE/MAX Realty Affiliates

Money held in trust is a very serious business ... something to be carefully watched and guarded!  There are many abuses in this area and consumers should be knowledgeable and careful when they turn money over to individuals for this purpose!  Great Post ... Thanks!

Original content by Lisa Wetzel

Your Money In Trust ... A Trust Account ... What Should You Expect?

A friend came to us recently with a problem. She had a rental home in another state and the property manager was going out of business ...Lisa Wetzel and Jim Valentine money in trust way out. They sold the accounts to another firm, but claimed they had no money to give her or the new company... the money that they held in trust for her, i.e.- rents that they had collected but not paid her and the deposits the tenants had paid when they moved in. She received a letter from the company's attorney saying they had run out of money that sounded like, "Oops, oh well."

What got our attention was that this involved Trust Funds, money held in trust by the company for our friend. They had (have) a responsibility to keep track of it, keep it separate from their company money, and to pay it to our friend.

The State of Nevada has published this description: "Trust Funds are money or things of value that are received by the broker or salesperson on behalf of a principal or client or other person in the performance of duties for which a real estate license is required, which are not the property of the broker but are being held for the benefit of others." 

For perspective, consider that if Trust Funds go unclaimed and the owner can't be located the Funds must be turned over to the Office of the State Treasurer, Unclaimed Property.

When you deliver an Earnest Money Deposit to buy a house it is Trust Funds. The broker has a responsibility for the safety and accountability of that money. EMD's are usually transferred by the broker to an escrow holder who has the same duty to protect money held in trust. Brokers and escrow holders have a duty to make sure that the funds are safe and distributed in accordance with the contract that they are associated with.

What happens to the EMD if your sale does not close? NRS645A.175 states "... each party shall execute the documents necessary to release the money deposited in the escrow." It takes both and both are mandated to sign what we call cancellation instructions. It goes on to say that one may refuse to sign if a good faith dispute exists concerning the money. There are, however, potential damages that can be charged for delaying signing the cancellation instructions of "Actual damages of not less than $100 nor more than 1% of the purchase price, whichever is greater, and reasonable atrust funds in Nevada  Lisa wetzel and Jim valentinettorney's fee." More costs can be incurred if the holder of the funds is forced to deliver them to the court for an Interpleader action.

Our Advice: Trust Funds can be more than money, i.e- motor vehicle, jewelry, or other personal property. Be careful when you put your Trust Funds up. Make sure that everyone has done what they need to do, i.e.- signed their documents, if you are dealing with a large sum of cash. It takes both signatures to get it released. Be careful who you give your money to. You should have confidence and trust in them that your funds won't be comingled or converted, both illegal. There are occasional occurrences of embezzlement of Trust Funds, usually on the sly by an unscrupulous employee. Companies should have strong accounting and security measures to minimize their exposure to theft, and most do in our area.

Our friend filed a complaint with that state's Attorney General's office and has learned that there are many similar filings. The offending company was a huge advertiser, bragged about their holdings in ads, and was one of the largest property managers in the major city where this occurred. Their demise is newsworthy, and may end up hurting a lot of people by their illegal behavior. Taking from a trust account is nothing short of stealing - it's not their money - they were trusted to hold it!

 When it comes to choosing professionals to assist you with your real estate needs... Experience is Priceless!  Lisa Wetzel & Jim Valentine, CDPE, SFR, RE/MAX Realty Affiliates, 775-781-5472.  carsonvalleyland@hotmail.com, www.carsonvalleyland.com

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Lisa Wetzel and Jim Valentine are the authors of this blog.  Lisa, Jim and Jessie are experts in Carson Valley , Carson City and the tri-county area of  Douglas County , Carson City and Lyon County.  Call our team anytime at 775-781-5472 or 775-781-3704.  To Search for Homes go to: Carson Valley Listing Book  or visit our website at www.CarsonValleyLand.net or  www.CarsonValleyLand.com

Comments (1)

Lisa Wetzel
RE/MAX Realty Affiliates - Carson City, NV
CDPE, SFR carsonvalleyland.com

Thanks for the Re-post!  Yes, this is a sensitive subject and needs to be monitored!

May 21, 2011 04:10 AM