5 Tips for Complying with Ohio’s Unclaimed Funds Law
April 13, 2018 |
Many real estate brokerages do not realize they are subject to Ohio’s Unclaimed Funds Law. The law sets for the process of identifying and reporting funds a real estate brokerage is holding that belong to others. One obvious fund that brokerages hold is the escrow deposit on a purchase contract, but there are others. Commissions, rents, security deposits, payroll and reimbursement checks are all types of funds reportable as unclaimed funds. Below are 5 tips for assuring you’re compliant with Ohio’s Unclaimed Funds Law.
- Dormant Funds are funds that the brokerage has held for a certain period with no communication (oral or otherwise) with the owner of the funds. In the case of escrow deposits on a purchase contract, the “owner” of the funds are both the buyer and seller.
- The Dormancy Period varies depending on the type of fund at issue. Commissions, payroll, rents, security deposits all have a one-year dormancy period. Escrow funds have a two-year dormancy period and expense reimbursement checks become dormant after three years.
- Unclaimed Funds are funds the brokerage has held for the Dormancy Period. If the funds are less than $50, they are reportable to the Ohio Division of Unclaimed Funds but a notice is not required to be sent to the owner. Brokerages are required to notify owners that it is holding unclaimed funds if they are more than $50 but less than $1000. For funds $1000 or more, the brokerage must send the owner notice by certified mail.
- The Unclaimed Funds Notice must include a self-addressed, stamped return envelope, notify the owner that he/she has 30 days to request the funds, or they will be turned over to the Division of Unclaimed Funds. If the owner responds to the notice, the brokerage cannot turn the funds over to the Division of Unclaimed Funds. Conversely, if the owner fails to respond, the funds must be turned over.
- Every brokerage is required to file an annual report with the Division of Unclaimed Funds, due November 1st of each year. Brokerages must file the report even if there are not any unclaimed funds to report.
The Ohio Division of Unclaimed Funds has a guide for real estate brokers, which will aid in understanding the law and how to comply with reporting and remitting requirements. Companies that fail to file a report of unclaimed funds can face a civil penalty of $100.00 plus interest charges.