MISSISSIPPI LEGISLATURE
2004 Regular Session
To: Business and Financial Institutions
By: Senator(s) Hewes, Michel
AN ACT TO AMEND SECTIONS 73-35-103 AND 73-35-105, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT INTEREST EARNED ON REAL ESTATE BROKERS' ESCROW ACCOUNTS SHALL BE MADE PAYABLE TO THE MISSISSIPPI HOUSING OPPORTUNITY FOUNDATION; TO PROVIDE THE PURPOSES FOR WHICH THE INTEREST EARNINGS MAY BE EXPENDED; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. 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 the 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 2. 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 the fund for the interest earnings on the 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) 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) To increase affordable housing opportunities in Mississippi by all necessary and proper means;
(b) To promote the availability of affordable, adequate, safe and decent housing to the citizens of the State of Mississippi;
(c) To support education and research in housing issues, problems and opportunities;
(d) To provide technical assistance to groups seeking to deal with housing issues and needs;
(e) To engage in activities intended to enhance the ability of Mississippi citizens to secure housing;
(f) To provide financial resources to organizations that encourage homeownership opportunities for moderate, low and very low income individuals and families; however, interest earnings from the Mississippi Housing Opportunity Foundation Fund shall not be used to provide or supplement any down payment which exceeds twenty percent (20%) of the value of the house, nor to assist in the purchase of any house the value of which exceeds One Hundred Thousand Dollars ($100,000.00).
(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. Only interest earnings from the corpus may be spent for the purposes in subsection (5) above.
(7) The program 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 3. This act shall take effect and be in force from and after July 1, 2004.