Compliance Review Information
Commission employees examine records and trust accounts through a compliance review by mail program and by onsite visits.
The primary purpose of examinations is to determine that funds received by licensees in real estate transactions are properly handled. Examiners track funds to be sure they are properly deposited, there are no unauthorized or early disbursements, and funds are not co-mingled or converted to personal use.
Examiners also review contracts and other documents in the transaction files to monitor compliance with law and regulations.
All records relating to the broker's real estate business are to be retained in the broker's files for three years.
Transaction numbers are to be assigned and placed on all applicable records in the form mandated by this regulation.
If the broker maintains a trust account, a complete record of all monies received or escrowed on real estate transactions must be maintained.
Each transaction file, whether PENDING, CLOSED or CANCELLED, should contain all of the following records (IF APPLICABLE) to the transaction:
- Agency Agreement with Seller
- Agency Agreement with Buyer
- Transaction Broker Agreement
- Transaction Broker Addendum
- Offers, Counteroffers
- Lot Reservation Agreement
- Commercial Lease
- Receipt for Purchase Agreement and Earnest Money
- Closing Statements
- Authorization to disburse Earnest Money on Transaction which did not close
- Any other record generated in connection with Transaction
A complete record of all monies received or escrowed on real estate transactions must be maintained:
- deposit slips showing transaction number, date of deposit, amount and where deposited
- monthly trust account bank statement, canceled checks and deposit slips
- a check register which shows the chronological sequence in which funds are received and disbursed
- for funds received: date of deposit, transaction number, amount
- for disbursement: date, transaction number, payee, amount
- the current balance
- a ledger for each transaction, including:
- names of principals
- property address
- transaction number
- amount of each deposit
- date of each deposit
- check number
- date of check
- amount of each disbursement
- the current balance
- a ledger for broker's funds, if applicable
Reconcile trust account records monthly.
Step 1: How much money is in the trust account?
Balance the bank statement.
Step 2: How much money should be in the trust account?
Establish trust account liability by adding the balances of all ledgers. If ledgers are properly maintained and no errors are made, the total of all ledgers will be the trust account liability.
Step 3: Compare trust account liability to the reconciled bank balance.
Does the bank balance match trust account liability? If they don't match to the penny, find out WHY.
Brokers are required to maintain all transaction files and trust account records. Each transaction file, whether pending, closed or cancelled, should contain the following record (if applicable):
* agency agreement with seller
* agency agreement with buyer
* transaction broker addendum
* transaction brokerage agreement
* offers, counteroffers
* lot reservation agreement
* commercial lease
* receipt for purchase agreement and earnest money
* closing statements
* authorization to disburse earnest money on transaction which did not close
* any other record generated in connection with the transaction.
The Kansas license law requires the supervising broker to keep records for three years. A broker may want to check with their accountant and/or attorney to see if retaining the records for a longer period of time is recommended.
The primary purpose of a compliance review is to determine whether funds received by licensees in real estate transactions are handled properly and whether transactions comply with Kansas law. Examiners track funds to be sure they are properly deposited, that there are no unauthorized or early disbursements, and that funds are no commingled or converted for personal use.
Brokers that have a valid email address on file with the Commission will initially be contacted by email. Brokers without a valid email address will be contact by U.S. Mail. Within the first correspondence, the broker will be asked the preferred method of future contact for the remainder of the compliance review.
Yes. The Compliance Review Questionnaire with transaction log and transaction files requested by the examiner may be sent by email. This is the Commission's preferred method.
No. The examiner does not assess fines and is not able to provide that information. Once the compliance review is complete, the file is sent to the Commission office. The broker will receive the official results from the Commission by U.S. Mail.
If there are no violations, the examiner will notify the broker by written letter upon completion of the compliance review. If there are violations, the examiner will discuss the violations with the broker and submit the file to the Commission office for review.
The broker will have an opportunity to request a hearing on the official results of the compliance review if any disciplinary action is imposed.