Real estate trust fund accounts: fidelity insurance.

Existing law, the Real Estate Law, provides for the licensure and regulation of real estate brokers by the Real Estate Commissioner. Existing law requires a real estate broker who accepts funds belonging to others in connection with a transaction to deposit all those funds in either a neutral escrow depository, into the hands of the broker's principal, or into a trust fund account, as specified. Existing law authorizes certain persons, including, among others, a real estate salesperson licensed to the broker to withdraw funds from a trust fund account of the broker if specifically authorized in writing. Existing law authorizes an unlicensed employee of the broker to withdraw funds from the broker's trust fund account if the broker has fidelity bond coverage equal to the maximum amount of the trust funds to which the unlicensed employee has access to at any time. Existing law authorizes this bond to have a deductible of up to 5% of the coverage amount, if the employing broker has evidence of financial responsibility and requires financial responsibility to be a separate fidelity bond coverage or a cash deposit adequate to cover the amount of the fidelity bond deductible, as specified, or any other evidence of financial responsibility approved by the commissioner. This bill would also authorize an unlicensed employee of the broker to withdraw funds if the broker has insurance coverage equal to the maximum amount of the trust funds to which the unlicensed employee has access to at any time. The bill would require, in this context, that bonds and insurance protect the broker from intentional wrongful acts committed by an employee of that business, including theft, dishonest acts, or forgery. The bill would make conforming changes.