MISSISSIPPI LEGISLATURE
2004 Regular Session
To: Judiciary B
By: Representative Morris, Whittington, Scott, McBride, Formby, Bailey, Banks, Barnett, Blackmon, Broomfield, Brown, Buck, Burnett, Calhoun, Chism, Clark, Clarke, Coleman (29th), Coleman (65th), Cummings, Davis, Dedeaux, Ellis, Evans, Flaggs, Fredericks, Gadd, Gibbs, Green, Guice, Gunn, Harrison, Hines, Holloway, Huddleston, Hudson, Mayo, Middleton, Montgomery, Moss, Myers, Nicholson, Perkins, Reynolds, Robinson (63rd), Smith (27th), Thomas, Watson, Wells-Smith, West, Young
AN ACT TO MAKE LEGISLATIVE DECLARATIONS REGARDING INTEREST ON THE REAL ESTATE BROKERS ACCOUNTS ACT; TO AMEND SECTIONS 73-35-103 AND 73-35-105, MISSISSIPPI CODE OF 1972, TO REVISE DEFINITIONS; TO REVISE THE PRINCIPLES REGARDING THE INTEREST ON REAL ESTATE BROKERS' ACCOUNTS ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. The Mississippi Legislature supports the efforts of the Mississippi Association of Realtors and Mississippi Bankers Association to establish a foundation dedicated to funding initiatives that will increase housing opportunity in Mississippi. The primary goal is to increase the supply of affordable housing and enhance the ability of low and middle income wage earning Mississippians to achieve the American Dream of homeownership.
The IREBEA program created by this act shall be strictly voluntary. Buyers who wish to have their escrow deposits placed in an interest-bearing account for their own benefit still will be able to do so. Brokers who participate in the fund will be issued a "notice to customers" to be displayed in the lobby of their offices, announcing the program and outlining its objectives.
The Mississippi Legislature does not expect real estate licensees to obtain the express permission of clients to use interest earned from their deposits to participate in this program; it is sufficient for licensees to prominently display their notice of participation in this program by posting a sign in the lobby of their offices, announcing the program and outlining its objectives.
SECTION 2. Section 73-35-103, Mississippi Code of 1972, is amended as follows:
73-35-103. As used in Sections 73-35-101 through 73-35-105, the following terms shall have the meanings ascribed herein unless the context clearly indicates otherwise:
(a) "Real estate broker" or "broker" means an individual, partnership or corporation licensed pursuant to Section 73-35-1 et seq., and as defined under Section 73-35-3(1).
(b) "IREBEA" means the program created and governed by Sections 73-35-101 through 73-35-105.
(c) "Interest earnings" means the total interest earnings generated by the IREBEA at each individual financial institution.
(d) "Mississippi Housing Opportunity Foundation" means the 501(c)(3) organization created by the Mississippi Association of Realtors and Mississippi Bankers Association for the purpose of increasing the supply of affordable housing in Mississippi and encouraging homeownership among low and middle income wage earners with funds generated via the IREBEA program.
SECTION 3. Section 73-35-105, Mississippi Code of 1972, is amended as follows:
73-35-105. (1) The IREBEA program shall be a voluntary program based upon willing participation by real estate brokers, whether proprietorships, partnerships or professional corporations.
(2) IREBEA shall apply to all clients or customers of the participating brokers whose funds on deposit are either nominal in amount or to be held for a short period of time.
(3) The following principles shall apply to clients' or customers' funds which are held by brokers who elect to participate in IREBEA:
(a) No earnings on the IREBEA accounts may be made available to or utilized by a broker.
(b) Upon the request of the client or customer, earnings may be made available to the client whenever possible upon deposited funds which are neither nominal in amount nor to be held for a short period of time; however, traditional broker-client or broker-customer relationships do not compel brokers either to invest clients' or customers' funds or to advise clients or customers to make their funds productive.
(c) Clients' or customers' funds which are nominal in amount or to be held for a short period of time shall be retained in an interest bearing checking or savings trust account with the interest, less any service charge or fees, made payable at least quarterly to the Mississippi Housing Opportunity Foundation Fund as required in subsection (6).
(d) The broker shall select in writing that the Mississippi Housing Opportunity Foundation shall be the beneficiary of such fund for the interest earnings on such fund. * * *
(e) The determination of whether clients' or customers' funds are nominal in amount or to be held for a short period of time rests in the sound judgment of each broker, and no charge of ethical impropriety or other breach of professional conduct shall attend a broker's exercise of judgment in that regard.
(f) Notification to clients or customers whose funds are nominal in amount or to be held for a short period of time is unnecessary for those brokers who choose to participate in the program. Participation in the IREBEA program is accomplished by the broker's written notification to an authorized financial institution. That communication shall contain an expression of the broker's desire to participate in the program and, if the institution has not already received appropriate notification, advice regarding the Internal Revenue Service's approval of the taxability of earned interest or dividends to the Mississippi Housing Opportunity Foundation Fund.
(4) The following principles shall apply to those clients' or customers' funds held in trust accounts by brokers who elect not to participate in IREBEA:
(a) No earnings from the funds may be made available to any broker.
(b) Upon the request of a client or customer, earnings may be made available to the client or customer whenever possible upon deposited funds which are neither nominal in amount nor to be held for a short period of time; however, traditional broker-client or broker-customer relationships do not compel brokers either to invest clients' or customers' funds or to advise clients or customers to make their funds productive.
(c) Clients' or customers' funds which are nominal in amount or to be held for short periods of time, and for which individual income generation allocation is not arranged with a financial institution, shall be retained in a noninterest-bearing demand trust account.
(d) The determination of whether clients' or customers' funds are nominal in amount or to be held for a short period of time rests in the sound judgment of each broker, and no charge of ethical impropriety or other breach of professional conduct shall attend a broker's exercise of judgment in that regard.
(5) The corpus and interest earnings from the Mississippi Housing Opportunity Foundation Fund shall be expended solely for the following purposes when allowed under Section 501(c)(3) of the Internal Revenue Code;
(a) Increase affordable housing opportunities in Mississippi by all necessary and proper means;
(b) Promote the availability of affordable, adequate, safe and decent housing to the citizens of Mississippi;
(c) Support education and research in housing issues, problems and opportunities;
(d) Provide technical assistance to groups seeking to deal with housing issues and needs;
(e) Engage in activities intended to enhance the ability of Mississippi citizens to secure housing;
(f) Provide financial resources to organizations that encourage homeownership opportunities for moderate, low and very low income individuals and families.
(6) All funds received from the IREBEA program shall be deposited with the Mississippi Housing Opportunity Foundation Fund quarterly. A separate accounting shall be made annually for all funds received. The corpus from the previous Real Estate Endowment Fund authorized under this act may be disbanded and distributed for use by the educational institution holding the funds at its discretion. The program authorized in subsection (5) and the budget therefore shall be approved by a board of directors. The board shall consist of four (4) representatives appointed by the Mississippi Association of Realtors and three (3) appointed by the Mississippi Bankers Association. This legislation shall only allow for this project to be performed. However, the Mississippi Housing Opportunity Foundation and their attorney(s) shall be responsible for complying with all federal and state laws and regulations including, but not limited to, any necessary IRS code provisions.
(7) The educational programs authorized in subsection (5) and the budget therefor shall be approved by a board of directors * * *. The board shall consist of four (4) representatives appointed by the Mississippi Association of Realtors and three (3) appointed by the Mississippi Bankers Association.
(8) The Mississippi Real Estate Commission shall adopt appropriate and necessary rules in compliance with the provisions of Sections 73-35-101 through 73-35-105.
SECTION 4. This act shall take effect and be in force from and after July 1, 2004.