FACTS: A brokerage has a property management division and manages 300 properties.  Licensees John, Jill and Joe have their license with the brokerage, and they personally own rentals that are managed by the brokerage.

The brokerage has one trust account to hold all of the security deposits and rent for the 300 rentals.

ISSUE: May the brokerage hold the security deposit or other funds on behalf of John, Jill and Joe in the brokerage’s trust account?

ANSWER: No.

DISCUSSION:

In Arizona, under the laws of Agency a licensee is viewed as the same person as the broker.  Therefore, if the brokerage holds John, Jill and Joe’s funds in the trust account, the brokerage has likely commingled funds.

Based on the above, the brokerage should open a second trust account to separately hold John, Jill and Joe’s funds.

See, Arizona Department of Real Estate Model Broker’s Policy and Procedures Manual, page 36.