KRS 324.111: Escrow account of broker -- Interest -- Audit -- Contract deposit release --

Separate property management accounts.

(1) A principal broker shall maintain an escrow account or accounts, separate from the

individual or office account, in which all contr act deposits and money belonging to

others shall be deposited without unreasonable delay. The escrow accounts shall be

maintained within the State of Kentucky and shall be identified to the commission

in writing. Each principal broker shall advise the comm ission, in writing, if any

overdraft occurs in the escrow account for any reason other than service charges

instituted by the bank, and which is not corrected within seventy -two (72) hours of

the broker receiving notice.

(2) The broker may place the deposi t in an interest -bearing account or instrument. The

interest earned shall accrue to the person agreed to in writing by all parties.

(3) No checks shall be drawn against uncollected deposits in the escrow account.

(4) None of the contract deposits shall be withdrawn until the contract has been

terminated by performance, by agreement in writing between all parties, or by order

of a court of competent jurisdiction, except as permitted in subsection (6) of this

section.

(5) Upon licensure and each renewal, the principal broker shall sign a permit giving the

commission the permission to audit all his or her escrow accounts.

(6) Upon being notified that one (1) or more parties to a contract intends not to

perform, the broker may initiate the release process. The r elease process shall

require the broker to notify all parties at their last known address by certified mail

that the contract deposit shall be distributed to the parties specified in the letter

unless all parties enter into a written mutual release, or unless one (1) or more of the

parties initiate litigation within sixty (60) days of the mailing date of the certified

letter. If neither buyer nor seller initiates litigation or enters into a written release

within sixty (60) days of the mailing date of the c ertified letter, the broker may

release the deposit to the party identified in the certified letter without penalty under

this section and without civil liability in the courts of the Commonwealth of

Kentucky.

(7) All principal brokers whose companies enga ge in property management shall

maintain property management accounts separate from all other accounts or

specifically indicate in all escrow records if funds are property management funds.

(8) A broker or sales associate who owns rental property shall not be required to use the

principal broker's management account for the rental property, unless required by

the principal broker.

(9) If any licensee is alleged to have committed an escrow account violation that

warrants emergency action, the commission may conduct an emergency hearing as

authorized by KRS 324.150(1)(b).