Loading
The Oregon Administrative Rules contain OARs filed through August 15, 2014
 
QUESTIONS ABOUT THE CONTENT OR MEANING OF THIS AGENCY'S RULES?
CLICK HERE TO ACCESS RULES COORDINATOR CONTACT INFORMATION

 

REAL ESTATE AGENCY

 

DIVISION 25

PROPERTY MANAGEMENT

863-025-0005

Application and Purpose

(1) OAR 863-025-0010 to 863-025-0080 apply to the activities of a real estate property manager in the management of rental real estate.

(2) The purposes of OAR 863-025-0010 to 863-025-0080 are:

(a) To specify requirements for the management of rental real estate as defined in ORS 696.010(9);

(b) To protect owners and tenants of rental real estate; and

(c) To make the real estate property manager responsible for establishing a system of recordkeeping that:

(A) Provides the Agency with access to the records of the real estate property manager; and

(B) Complies with OAR 863-025-0010 to 863-025-0080 and ORS Chapter 696.

(3) The goal of the Agency is to encourage real estate property managers to comply with the applicable statutes and rules through education and, if necessary, through the use of progressive discipline as defined in ORS 696.396.

(4) Section (3) of this rule does not limit the Agency's authority to reprimand, suspend or revoke a real estate property manager license under ORS 696.301 or assess civil penalties under ORS 696.990.

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.361
Hist.: REA 3-1987, f. 12-3-87, ef. 1-1-88; REA 1-2002, f. 5-31-02, cert. ef. 7-1-02, Renumbered from 863-010-0207; REA 2-2006(Temp), f. 9-11-06, cert. ef. 9-15-06 thru 3-12-07; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

863-025-0010

Definitions

In addition to the definitions used in ORS 696.010 and 863-015-0120, as used in OAR 863-025-0015 to 863-025-0080, unless the context requires otherwise:

(1) “Audit trail” means a documented history of a financial transaction by which the transaction can be traced to its source.

(2) “Bank account” is defined in ORS 696.010.

(3) “Banking day” means each day a bank is required to be open for the normal conduct of its business but does not include Saturday, Sunday, or any legal holiday under ORS 187.010.

(4) “Clients’ Trust Account” means a federally insured bank account labeled as “Clients’ Trust Account” on all bank records and checks that is established and maintained by a property manager, acting on behalf of an owner under a property management agreement, for depositing, holding and disbursing funds received by the property manager on behalf of an owner, including application fees and application screening fees.

(5) “Compliance review” means an Agency review of a property manager’s records and procedures for the purpose of educating the property manager on statutes and rules.

(6) “Cure noncompliance” means a property manager’s acts that resolve the property manager’s failure to comply with statutory and rule requirements.

(7) “Employee” means a non-licensed individual employed by a property manager for wages or a salary.

(8) “Identifying code” means a unique series of letters and/or numbers assigned by a property manager to a property management agreement at the time the agreement is signed by the parties and used on all transactions and records to reference the agreement. A property manager may use a supplemental unique series of letters and/or numbers on transactions and records if the property manager establishes a clear audit trail to a specific property management agreement and to the original identifying code.

(9) “Investigation” means an Agency-initiated investigation of a property manager that may result in administrative actions against the licensee.

(10) “Mail-in audit” means an Agency audit of a clients’ trust account based on information and documents prepared by a property manager and mailed to the Agency.

(11) “Owner” means a person or persons who own rental real estate that is managed by a property manager.

(12) “Property management agreement” is defined in ORS 696.010.

(13) “Property manager” is defined in ORS 696.010.

(14) “Records” and “property management records” mean a complete and adequate documentation of the management of rental real estate.

(15) “Security Deposit” means a conditionally refundable payment or deposit of money, however designated, the primary function of which is to secure the performance of a rental or lease agreement or any part of a rental or lease agreement.

(16) “Security Deposits Account” means a federally insured clients’ trust account labeled as “Clients’ Trust Account — Security Deposits” on all bank records and checks that is established and maintained by a property manager, acting in a fiduciary capacity on behalf of an owner under a property management agreement, for depositing, holding and disbursing security deposit funds.

(17) “Sufficient funds” or “sufficient credit balance” means an amount of funds on an owner’s ledger or a tenant’s ledger that is equal to or greater than the amount of a planned disbursement from a clients’ trust account or a security deposits account but which must not include any security deposits in a security deposits trust account that are required to be held pending the termination of a rental agreement. Only funds belonging to the owner or tenant on whose behalf the disbursement is planned may be considered in determining if there are sufficient funds or a sufficient credit balance.

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.010
Hist.: REA 1-2002, f. 5-31-02, cert. ef. 7-1-02; REA 1-2003(Temp), f. 2-27-03, cert. ef. 2-28-03 thru 8-27-03; REA 3-2003, f. 7-28-03, cert. ef. 8-1-03; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09; REA 8-2014, f. 4-14-14, cert. ef. 4-28-14

863-025-0015

Written Policies and Delegation of Authority

(1) Each property manager must develop, maintain and follow written policies for persons and activities under this rule.

(2) Each policy must state the effective date of the policy.

(3) Policies must specify the duties, responsibilities, supervision and authority, including any authority to handle funds in a clients' trust account or security deposits account, for the following persons:

(a) A licensed property manager employed by the property manager, including any authority to negotiate tenant rental and lease agreements;

(b) An active real estate licensee engaged in the management of rental real estate under the supervision and control of a principal broker, including any authority to sign property management agreements under OAR 863-025-0020(6) and tenant rental and lease agreements under 863-025-0045(2); and

(c) An employee of the property manager, including any authority to:

(A) Negotiate tenant rental or lease agreements under OAR 863-025-0045(2);

(B) Check applicant or tenant references, including credit references;

(C) Physically maintain the real estate of an owner;

(D) Conduct tenant relations;

(E) Collect rent and other payments;

(F) Supervise premise managers; or

(G) Discuss financial matters relating to management of the real estate with the owner; and

(d) Contractors.

(5) Policies must include provisions that specify the production and maintenance of all reports, records and documents required under this division.

(6) The following delegations of the property manager's authority must be in writing, dated and signed by the property manager, and kept with written policies:

(a) Negotiate and sign property management agreements under OAR 863-025-0020(6);

(b) Review and approve reconciliations and receive and disburse funds under OAR 863-025-0025(23); and

(c) Review, approve and accept tenant rental and lease agreements under OAR 863-025-0045(2).

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.361
Hist.: REA 1-2002, f. 5-31-02, cert. ef. 7-1-02; REA 1-2005, f. 5-5-05, cert. ef. 5-6-05; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

863-025-0020

Property Management Agreements

(1) A property manager must not engage in the management of rental real estate without a written, unexpired property management agreement between the owner and the property manager.

(2) A property management agreement must include, but is not limited to:

(a) The address or legal description of the owner's rental real estate;

(b) The duties and responsibilities of the property manager and the owner;

(c) The authority and powers given by the owner to the property manager;

(d) The term of the agreement and the method for termination;

(e) The terms and conditions of the agreement;

(f) The management fees, application fees, screening fees, rebates, discounts, overrides and any other form of compensation to be received by the property manager for management of rental real estate including when such compensation is earned and when it will be paid;

(g) A description of the monthly statements of accounting the property manager will provide to the owner;

(h) The disposition of the property manager’s records of the management of the owner's rental real estate after termination of the agreement;

(i) Disclosure of the use of employees or a business in which the property manager has a pecuniary interest at the time of the execution of the property management agreement, that will provide services for the owner’s property;

(j) A statement that the property manager will disclose to the owner, in writing, the property manager’s planned use of any employees or a business in which the property manager has a pecuniary interest to provide services for the owner’s property, if such employees or business were not disclosed in the property management agreement pursuant to section (2)(i) of this rule;

(k) An identifying code;

(l) Signatures of the property manager, or a person authorized in section (6) of this rule, and the owner; and

(m) The date of the agreement.

(3) If the property manager and owner agree to any of the following terms, the terms must be included in the property management agreement:

(a) Payment of a referral fee, rent credit or other compensation to a tenant as allowed under ORS 696.290(2);

(b) Placement of trust funds received by a property manager in a federally insured interest-bearing clients' trust account or security deposits account as allowed under ORS 696.241(5) or (6), including provisions specifying to whom the interest earnings inure as follows:

(A) If the interest earnings inure to the benefit of the owner, when such interest earnings will be disbursed;

(B) If the interest earnings inure to the benefit of the property manager, that such interest will be disbursed to the property manager within ten calendar days from the date of the bank statement on which such interest is first shown as required in OAR 863-0025-0025(8) and

(c) Specific pass-through charges that will be paid by the owner.

(4) Any amendment or addendum to the property management agreement must be in writing and include the identifying code, the date of the amendment, the signature of the property manager and the signatures of all owners who signed the initial property management agreement.

(5) Only a principal real estate broker or real estate broker may enter into an agreement, which must be separate from the property management agreement, authorizing the real estate broker to represent an owner in the purchase, sale, lease-option or exchange of the rental real estate that must include:

(a) The scope of the professional real estate activity;

(b) The term of the agreement;

(c) The compensation to be paid by the owner to the broker;

(d) Signatures of the real estate broker and the owner; and

(e) The date of the separate agreement.

(6) Only a property manager may negotiate and sign a property management agreement, except that a principal real estate broker engaging in the management of rental real estate may delegate such authority under OAR 863-025-0015(6) to a real estate licensee who is under the supervision and control of the principal real estate broker.

(7) The property manager must promptly deliver a legible copy of the fully executed property management agreement, and any addenda or amendments, to the owner.

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.361 & 696.280
Hist.: REA 1-2002, f. 5-31-02, cert. ef. 7-1-02; REA 1-2003(Temp), f. 2-27-03, cert. ef. 2-28-03 thru 8-27-03; REA 3-2003, f. 7-28-03, cert. ef. 8-1-03; REA 1-2005, f. 5-5-05, cert. ef. 5-6-05; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

863-025-0025

Clients' Trust Account and Security Deposits Account Requirements

(1) All clients’ trust accounts and security deposits trust accounts must be federally insured bank accounts.

(2) A property manager must open and maintain at least one clients' trust account as defined in OAR 863-025-0010.

(3) Only the following funds may be held in a clients' trust account:

(a) Funds received by the property manager on behalf of an owner; and

(b) Interest earned, but only if the account is a federally insured interest-bearing account and the property management agreement complies with OAR 863-025-0020(3).

(4) Except as provided in section (7) of this rule, a property manager who receives security deposits on behalf of an owner must open and maintain a security deposits account, as defined in OAR 863-025-0010, that is separate from the property manager's clients' trust account.

(5) Except as provided in section (7) of this rule and OAR 863-025-0030, a property manager who receives a security deposit on behalf of an owner must deposit the security deposit into the property manager's security deposits account within five banking days after receipt.

(6) Only the following funds may be held in a security deposits account:

(a) Security deposits as defined in OAR 863-0025-0010; and

(b) Interest earned, but only if the account is a federally insured interest-bearing account and the property management agreement complies with OAR 863-025-0020(3) and the tenant has provided the property manager with written approval required in 863-0035-0025(24).

(7) When a property management agreement and a corresponding lease or rental agreement provide that the security deposit will be transferred to and held by the owner, the security deposit funds must be deposited in the clients' trust account and disbursed to the owner in the month in which they are received.

(8) If interest earned in a clients' trust account under section (3)(b) of this rule or in a security deposits account under section (6)(b) of this rule inures to the benefit of the property manager, such interest must be disbursed to the property manager within ten calendar days from the date of the bank statement on which such interest first appears.

(9) A property manager may not allow an owner to be an authorized signer on a clients' trust account or security deposit account and may not allow an owner to deposit, hold or disburse funds in a clients' trust account or security deposit account.

(10) A property manager must be an authorized signer on each client's trust account and each security deposits account and is solely responsible for the receipts and disbursements on each bank account.

(11) A property manager must maintain and account for all checks used for a clients' trust account or security deposits account including, but not limited to, voided checks. All such checks must:

(a) Include the account number;

(b) Be pre-numbered or, if checks are computer-generated, must be numbered consecutively;

(c) If the account is a clients' trust account, include the words "clients' trust account," but may include additional identifying language; and

(d) If the account is a security deposits account, include the words "clients' trust account — security deposits," but may include additional identifying language.

(12) A property manager must not disburse funds from a clients' trust account or security deposits account unless there are sufficient funds, as defined in OAR 863-025-0010, in the ledger account against which the disbursement is made.

(13) A property manager may only transfer funds from an owners' ledger account to one or more different owners' ledger accounts if:

(a) Each of the affected owners authorizing the transfer have signed and dated an agreement authorizing such transfer that is separate from any property management agreements;

(b) At the time of the transfer, the property manager enters the transfer information on each affected owners' ledger account, including but not limited to the amount of the transfer, date of the transfer and the source or destination of the transferred funds, as appropriate; and

(c) The property manager gives each owner a separate monthly accounting on the transfer or includes the accounting of the transfer activity in the regular monthly report to the owner.

(14) A property manager may only transfer funds between two or more owner's ledger accounts maintained for the same owner if:

(a) The owner has given the property manager prior written approval in the property management agreement or in an addendum to the agreement; and

(b) At the time of the transfer, the property manager enters the transfer information in each of the owner's affected ledger accounts including, but not limited to, the amount of the transfer, date of the transfer and the source or destination of the transferred funds, as appropriate.

(15) A property manager must disburse earned management fees from the client's trust account at least once each month unless a different schedule of disbursement is specified in the property management agreement, and may only disburse such fees if sufficient funds are available.

(16) The monthly cycle for a clients' trust account or security deposits account may begin and end on a stipulated date every month, if the date is consistent from month to month.

(17) A property manager may not disburse funds from a clients' trust account or security deposits account based upon a wire or electronic funds transfer deposited into the account, until the deposit has been verified by the property manager. The property manager must arrange with the account depository and other entities for written verification of when funds are received or disbursed by wire or electronic transfer.

(18) Upon request by the commissioner or an authorized representative of the commissioner, a property manager must demonstrate that a sufficient credit balance, as defined in OAR 863-025-0010, existed in a ledger account at the time of a disbursement is made from a clients' trust account or security deposits account by producing financial records showing that such disbursement did not involve the use of any other owner's or tenant's trust funds.

(19) A property manager may not utilize any form of debit card issued by financial institutions on a client trust account or security deposits account.

(20) A property manager must reconcile each clients' trust account within 30 calendar days of the date of the bank statement pursuant to the requirements contained in this section.

(a) The reconciliation must have three components that are contained in a single reconciliation document:

(A) The bank statement balance, adjusted for outstanding checks and other reconciling bank items;

(B) The balance of the record of receipts and disbursements or the check register as of the date of the bank statement; and

(C) The sum of all positive owners' ledgers as of the date of the bank statement.

(b) The balances of each component in section (20)(a) of this rule must be equal to and reconciled with each other. If any adjustment is needed, the adjustment must be clearly identified and explained on the reconciliation document.

(c) Outstanding checks must be listed by check number, issue date, payee and amount;

(d) Within 30 calendar days from the date of the bank statement, the property manager must:

(A) Complete the reconciliation document; and

(B) Sign and date the reconciliation document, attesting to the accuracy and completeness of the reconciliation; and

(e)The property manager must preserve and file in logical sequence the reconciliation document, bank statement, and all supporting documentation including, but not limited to, copies of the record of receipts and disbursements or check register and a listing of each owner’s ledger balance as of the date of the bank statement.

(21) A property manager must reconcile each security deposits account within 30 calendar days of the bank statement date pursuant to the requirements contained in this section.

(a) The reconciliation must have three components that are contained in a single reconciliation document:

(A) The bank statement balance, adjusted for outstanding checks and other reconciling bank items;

(B) The balance in the records of receipts and disbursements or the check register as of the date of the bank statement;

(C) The sum of all positive balances of individual security deposits and fees held in the security deposits account.

(b) The balances of each component in section (21)(a) of this rule must be equal to and reconciled with each other. If any adjustment is needed, the adjustment must be clearly identified and explained on the reconciliation document;

(c) Outstanding checks must be listed by check number, issue date, payee and amount;

(d) Within 30 calendar days of the date of the bank statement, the property manager must:

(A) Complete the reconciliation document; and

(B) Sign and date the reconciliation document, attesting to the accuracy and completeness of the reconciliation; and

(e)The property manager must preserve and file in logical sequence the reconciliation document, bank statement, and all supporting documentation including, but not limited to, copies of the record of receipts and disbursements or check register and a listing of all balances of individual security deposits and fees as of the date of the bank statement.

(22) A property manager must take corrective action to resolve all adjustments made in a reconciliation prior to the next reconciliation or document the good faith efforts the property manager has taken to resolve the adjustment.

(23) A property manager may delegate the property manager's authority to review and approve reconciliations and to receive and disburse funds for a clients' trust account or security deposits account to another person if the property manager complies with the provisions of OAR 863-025-0015; however, the property manager remains solely responsible for all funds and transactions.

(24) A property manager may place security deposits received by the property manager in a federally insured interest-bearing security deposits account if:

(a) The property management agreement includes a provision for such an account under OAR 863-025-0020(3);

(b) The tenant or tenants whose security deposits are deposited into such account have provided written approval for such an account; and

(c) The provisions in the property management agreement and the written approval of the tenant specify to whom and under what circumstances the interest earnings will accrue and be disbursed.

(25) The property manager's interest in or disbursement to the property manager of interest earnings from a clients' trust account or security deposits account is not a commingling of trust funds with a licensee's personal funds.

(26) A property manager must record the transfer of any funds from a clients' trust account or security deposits account by a check, by written proof of transmittal or receipt retained in the property manager's records. The property manager must record the transfer of other documents by written proof of transmittal or receipt retained in the property manager's records. A property manager may transfer funds electronically via the Internet or Automated Clearing House (ACH) software from a client's trust account to a bank account maintained by the owner and a property manager may make payments electronically to a vendor's account for expenses relating to the owner's property. If the software program used for the transfer does not automatically update the owner's ledger, the property manager must manually record the transfer in the owner's ledger. At the time the transfer is made, the property manager must print and preserve a hard copy of the electronic record of the transfer.

(27) A property manager may use a bank lockbox process in which the bank collects payments from tenants, creates an electronic record of the transaction, and deposits the payments into the appropriate clients' trust account by following the written instructions of the property manager only if the lockbox process is authorized in a property management agreement and:

(a) The property manager is responsible for determining that the lockbox process and lockbox software program provide controls adequate to ensure the security of the funds and to provide an accurate accounting for them;

(b) For the purposes of this rule, the bank is considered an agent of the property manager; and

(c) The software program for the lockbox process must permit monthly reconciliations of the accounts into which the deposits are made and printing of daily deposit records for the period of time required for retention of other records.

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.241, 696.280 & 696.361
Hist.: REA 1-2002, f. 5-31-02, cert. ef. 7-1-02; REA 1-2003(Temp), f. 2-27-03, cert. ef. 2-28-03 thru 8-27-03; REA 3-2003, f. 7-28-03, cert. ef. 8-1-03; REA 1-2005, f. 5-5-05, cert. ef. 5-6-05; REA 2-2006(Temp), f. 9-11-06, cert. ef. 9-15-06 thru 3-12-07; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

863-025-0030

Tenant Security Deposits

(1) Except as provided in section (3) of this rule, all tenants' security deposits received by a property manager must be deposited and maintained in a security deposits account until:

(a) The property manager forwards the tenant's security deposit to the owner of the property according to the terms of the tenant's rental or lease agreement and the property management agreement;

(b) The property manager disburses the tenant's security deposit for purposes authorized by the tenant's rental or lease agreement and the property management agreement;

(c) The property manager refunds a deposit to the tenant according to the terms of the tenant's rental or lease agreement and the property management agreement; or

(d) The property management agreement is terminated and the property manager transfers the tenant's security deposit to the owner unless the owner directs the property manager, in writing, to transfer the security deposits and fees to another property manager, escrow agent or person.

(2) If a property manager receives a security deposit as part of a larger check containing funds other than security deposits, the property manager may deposit the check into a clients' trust account of the property manager; however, the portion of the funds constituting security deposits must be deposited into the security deposits account within three banking days after deposit of the check into the clients' trust account.

(3) When a property manager establishes a clients' trust account for a single property and the property management agreement and the corresponding lease or rental agreement provide that the security deposit will be transferred to and held by the owner, the security deposit must be deposited in the clients' trust account and disbursed to the owner in the month in which they are received.

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.241, 696.280 & 696.361
Hist.: REA 1-2002, f. 5-31-02, cert. ef. 7-1-02; REA 1-2003(Temp), f. 2-27-03, cert. ef. 2-28-03 thru 8-27-03; REA 3-2003, f. 7-28-03, cert. ef. 8-1-03; REA 1-2005, f. 5-5-05, cert. ef. 5-6-05; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

863-025-0035

Records; Required Records; Maintenance; Production

(1) The property manager's records of the management of rental real estate are “complete and adequate” as required under ORS 696.280 if the records contain, at least, the following:

(a) A legible copy of each executed property management agreement and any executed addenda or amendments to that agreement;

(b) Client trust account and security deposit account records required by OAR 863-025-0000 to 863-025-0080 and ORS Chapter 696;

(c) An owner's ledger for each property management agreement;

(d) A record of receipts and disbursements or check register maintained for each clients’ trust account or security deposits account;

(e) A legible copy of each tenant agreement;

(f) A tenant's ledger for each tenant;

(g) A record of all cash receipts;

(h) All paid bills and receipts required under OAR 863-025-0040(8);

(i) A record of electronic bank transactions required under OAR 863-025-0040(9);

(j) Records of the reconciliation of each clients' trust account and security deposits account, including the reconciliation document;

(k) All cancelled checks or bank-supplied images of cancelled checks as provided under ORS 696.243(1) with the bank statements to which the checks pertain; and

(l) A record of all deposits for each clients' trust account and security deposits account.

(2) A property manager must produce records required under section (1) of this rule for inspection by the Agency as follows:

(a) When the Agency makes a request for production of property management records, the property manager must provide such records within no less than five banking days; and

(b) If the Agency has reasonable grounds to believe that funds of an owner or tenant may be missing or misappropriated or that the property manager is engaging in fraudulent activity, any records demanded or requested by the Agency must be produced immediately; and

(c) Failure to produce such records within the timelines stated in subsection (a) or (b) of this section is a violation of ORS 696.301.

(3) If a property manager uses a computerized system for creating, maintaining and producing required records and reports:

(a) The property manager must back up any data that is stored in the computerized system at least once every month; and

(b) Posting of owner ledgers, record of receipts and disbursements, tenant ledgers and manipulation of information and documents must be maintained in a format that will readily enable tracing and reconciliation.

(4) A property manager must maintain all records required under section (1) of this rule for a period of six years following the date on which such agreement or document is superseded, terminated, has expired or otherwise ceased to be used in the management of rental real estate.

(5) Subject to section (6) of this rule, a property manager may maintain records required under section (1) of this rule within this state at a location other than the property manager's licensed business location, or outside this state, but within the United States, if the property manager notifies the Commissioner in writing of each new location of records at least five banking days prior to establishing a new location. Notice to the Commissioner must include at least:

(a) The name, business address and telephone number of the property manager;

(b) A statement that the property manager intends to establish a new location for records;

(c) The complete address of the new location;

(d) The means of gaining access to the records at the new location and the name, address and telephone number of all contact persons who will provide access to the records during regular business hours;

(e) If the property manager has sole custody, control and access to the records, written, signed and dated authorization by the property manager for the Commissioner to freely access and inspect all records at the new location;

(f) If the property manager authorized a third party authority over custody, control or access to records, joint authorization from the property manager and such third party for the Commissioner to freely access and inspect all records at the new location; and

(g) The signature of the property manager attesting to the accuracy of the information and the date the notice is signed.

(6) If a property manager stores records at a location other than the property manager’s licensed business location, the property manager must maintain an inventory of such records and information necessary to retrieve specific records.

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.280 & 696.361
Hist.: REA 1-2002, f. 5-31-02, cert. ef. 7-1-02; REA 1-2003(Temp), f. 2-27-03, cert. ef. 2-28-03 thru 8-27-03; REA 3-2003, f. 7-28-03, cert. ef. 8-1-03; REA 1-2005, f. 5-5-05, cert. ef. 5-6-05; REA 2-2006(Temp), f. 9-11-06, cert. ef. 9-15-06 thru 3-12-07; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

863-025-0040

Record of Receipts and Disbursements

(1) Except as provided in section (4) of this rule, a property manager must prepare and maintain a chronological record of receipts and disbursements or a check register for each client's trust account and each security deposits account in which the manager must record each receipt of funds and each disbursement of funds.

(2) A record of receipts and disbursements or a check register must contain at least the following information:

(a) For each receipt of funds:

(A) The date the funds were received, unless the date is recorded in a separate document as provided in section (3) of this rule;

(B) The amount of the funds received;

(C) The purpose of the funds and identity of the person who tendered the funds; and

(D) The date the funds were deposited.

(b) For each disbursement of funds:

(A) The date the funds were disbursed;

(B) The amount of funds disbursed;

(C) The check number and payee of the disbursement; and

(D) The purpose of the disbursement.

(c) If there is more than one property in a clients’ trust account, each entry for a receipt, deposit or disbursement must be identified with the applicable identifying code;

(d) If the trust account is an interest-bearing account, the amount of interest earned and the date the interest was credited to the account; and

(e) The account balance after each entry.

(3) The property manager may record the date funds were received as required in section (2)(a)(A) of this rule in a record that is separate from the record of receipts and disbursement or check register if the property manager establishes an audit trail that shows when the funds were received and deposited.

(4) If a property manager maintains a separate client's trust account for a single owner pursuant to property management agreement, the property manager must maintain at least one of the following:

(a) A record of receipts and disbursements;

(b) A check register; or

(c) An owner's ledger as defined under OAR 863-025-0055.

(5) Upon any activity, the property manager must record each receipt, deposit or disbursement as required in this rule and record each deposit or disbursement on the corresponding owner's ledger as required in OAR 853-025-0055 and/or tenant’s ledger as required in 863-025-0050.

(6) A property manager may aggregate individual deposits or individual disbursements and record the aggregated total in the record of receipts and disbursements or check register only if the property manager:

(a) Aggregates the deposits or disbursements on a daily basis;

(b) Maintains a separate report that details the individual deposits or disbursements, which states the information for each deposit and disbursement as required in section (2) of this rule; and

(c) Preserves and maintains the detailed report as a required record.

(7) A record of receipts and disbursements or check register for a clients' trust account may show a negative balance during the course of a day only if the record of receipts and disbursements or check register shows a positive balance at the close of the day.

(8) A property manager must retain all paid bills and receipts explaining the amount of and purpose for the receipt or disbursement entered in the record of receipts and disbursements.

(9) A property manager may engage in electronic banking transactions, including the use of the Internet or by telephone, if a record of the transaction, sufficient to establish an audit trail, is created and maintained by:

(a) Printing a copy of the Internet transaction that includes the date, time, and nature of the transaction;

(b) Making a written notation of the telephone transaction including the date, time, and nature of the transaction; or

(c) Creating an electronic document that readily relates to the transaction containing the information in (a) or (b) of this section.

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.280 & 696.361
Hist.: REA 1-2002, f. 5-31-02, cert. ef. 7-1-02; REA 1-2005, f. 5-5-05, cert. ef. 5-6-05; REA 2-2006(Temp), f. 9-11-06, cert. ef. 9-15-06 thru 3-12-07; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

863-025-0045

Tenant Agreements

(1) Residential Property. The property manager must file and maintain legible copies of all tenant rental or lease agreements for the time period required under OAR 863-025-0035. Each tenant rental or lease agreement prepared by a property manager for residential real estate must contain, in addition to and not in lieu of any applicable requirements of the Residential Landlord and Tenant Act, the following:

(a) The licensed name and business address of the property manager and the name and address of the tenant. If a real estate licensee executes the rental or lease agreement on behalf of the licensee's principal real estate broker, the name of the real estate licensee acting for the principal real estate broker in executing the agreement;

(b) The mailing address or unit number of property being rented or leased, the amount and payment conditions of the rental or lease, and the rental or lease term; and

(c) The amount of and the reason for all funds paid by the tenant to the property manager including, but not limited to, funds for rent, conditionally refundable security deposits, and any fees or other charges.

(2) Residential and Non-Residential Property. The property manager must file and maintain legible copies of all tenant's rental or lease agreements for the time period required under OAR 863-025-0035. A property manager must review each tenant rental or lease agreement generated by the property manager; however, a property manager may authorize in writing another individual who is licensed to or employed by the property manager to review and approve and accept tenant rental and lease agreements on behalf of the property manager. In case of such authorization, the property manager remains responsible for each tenant rental and lease agreement approved or accepted by such real estate licensee or employee. The property manager must produce the written authorization at the request of the Commissioner or the Commissioner's authorized representative.

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.280 & 696.361
Hist.: REA 1-2002, f. 5-31-02, cert. ef. 7-1-02; REA 1-2005, f. 5-5-05, cert. ef. 5-6-05; REA 2-2006(Temp), f. 9-11-06, cert. ef. 9-15-06 thru 3-12-07; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

863-025-0050

Tenant Ledger

(1) Except as provided in section (3) of this rule, a property manager must prepare and maintain at least one tenant's ledger for each tenant or individual from whom the property manager has received any funds under a property management agreement, whether or not the tenant has executed a written rental or lease agreement at the time of the payment of funds to the property manager.

(2) A property manager must use the balances of tenant security deposits in individual tenant's ledgers in the monthly reconciliation of the security deposits account as required in OAR 863-025-0025.

(3) A property manager must prepare and maintain a separate record of the receipt of funds from prospective tenants who are not tenants at the time of paying the funds to the property manager, who do not pay the funds for a particular rental unit and who do not become tenants after such payment

(4) A tenant’s ledger must contain at least the following information:

(a) The name of the tenant;

(b) The legal description of the property, the mailing address of the property and the unit number, or a unique series of letters and/or numbers that establishes an audit trail to the tenant agreement;

(c) The identifying code;

(d) For each deposit of funds:

(A) The amount of funds received;

(B) The purpose of the funds and identity of the person who tendered the funds; and

(C) The check number, cash receipt number or a unique series of letters and/or numbers that established an audit trail to the receipt of funds; and

(D) The date the funds were deposited;

(e) For each disbursement of funds:

(A) The date the funds were disbursed;

(B) The amount of funds disbursed;

(C) The check number or bank-generated electronic tracking number;

(D) The payee of the disbursement;

(E) The purpose of the disbursement; and

(f) The balance after each recorded entry.

(5) If a property manager receives a check from a tenant or prospective tenant for rent, tenant's security deposits or fees and the tenancy fails for any reason within three banking days following receipt of the check, the property manager may return the check to the tenant or prospective tenant without first depositing and processing the check through the property manager's client trust account. The property manager must retain a photocopy of the check and a dated receipt for the check in the required records of property management activity. The property manager must record the amount of the check, the dates of receipt and return of the check on the ledger required under section (3) of this rule.

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.280 & 696.361
Hist.: REA 1-2002, f. 5-31-02, cert. ef. 7-1-02; REA 1-2003(Temp), f. 2-27-03, cert. ef. 2-28-03 thru 8-27-03; REA 3-2003, f. 7-28-03, cert. ef. 8-1-03; REA 1-2005, f. 5-5-05, cert. ef. 5-6-05; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

863-025-0055

Owner Ledger

(1) A property manager must prepare and maintain at least one separate owner's ledger for each property management agreement, for all monies received and disbursed.

(2) If a property manager maintains a separate client's trust account for a single owner pursuant to property management agreement, the property manager may maintain either a record of receipts and disbursements or check register in lieu of an owner's ledger.

(3) All owner ledgers must contain at least the following information:

(a) The owner’s name and identifying code;

(b) For each deposit of funds:

(A) The amount of funds received;

(B) The purpose of the funds and identity of the person who tendered the funds;

(C) The check number, cash receipt number or a unique series of letters and/or numbers that established an audit trail to the receipt of funds; and

(D) The date the funds were deposited;

(c) For each disbursement of funds:

(A) The date the funds were disbursed;

(B) The amount of funds disbursed;

(C) The check number or bank-generated electronic tracking number;

(D) The payee of the disbursement;

(E) The purpose of the disbursement; and

(d) The balance after each recorded entry.

(4) A property manager must report in writing to each owner any change in the owner's ledger. A monthly report, showing all receipts and disbursements for the account of the owner during the prior monthly period, is sufficient under this section. A copy of each such report must be preserved and filed in the property manager's records. If an annual report contains information not required to be provided by the property manager under these rules, the property manager must set forth such information separately.

(5) A property manager must retain all paid bills and receipts explaining the amount of and purpose for the receipt or disbursement entered in the owner's ledger.

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.280 & 696.361
Hist.: REA 1-2002, f. 5-31-02, cert. ef. 7-1-02; REA 1-2005, f. 5-5-05, cert. ef. 5-6-05; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

863-025-0060

Cash Receipts

(1) A property manager must prepare a legible written receipt for any cash funds received under a property management agreement.

(2) If a property management agreement states that the property manager is responsible for collecting cash from machines located on the owner’s property including, but not limited to, vending and laundry machine, the property manager must prepare and maintain cash receipts as provided in this rule.

(3) Cash receipts must be consecutively pre-numbered, be printed in at least duplicate form and must contain:

(a) The date of receipt of the cash funds;

(b) The amount of the funds;

(c) The reason for payment or collection of the funds received;

(d) The identifying code of the owner on whose behalf the cash funds were received;

(e) The tenant's name or, in the case of collection of cash as provided in section (2) of this rule, the machine(s) the cash was collected from;

(f) The payee of the funds; and

(g) The name and signature of the individual who actually received the cash and prepared the receipt.

(4) A copy of the receipt must be maintained in the property manager's records.

Stat. Auth.: ORS 696.385
Stats. Implemented: ORS 696.280 & 696.361
Hist.: REA 1-2002, f. 5-31-02, cert. ef. 7-1-02; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

863-025-0065

Deposits and Funds Received

(1) All funds, whether in the form of money, checks, or money orders belonging to others and accepted by any property manager while engaged in property management activity, must be deposited prior to the close of business of the fifth banking day following the date of the receipt of the funds into a clients' trust account or security deposits account as defined in OAR 863-025-0010 and established by the property manager under ORS 696.241. The property manager must account for all funds received.

(2) Any person employed by the property manager must promptly transmit to the property manager any money, checks, money orders, or other consideration and any documents received while engaged in property management activity.

(3) A property manager may not deposit any funds received on behalf of an owner in the property manager's personal account or commingle any such funds received with personal funds of the property manager.

(4) Except for funds received pursuant to OAR 863-025-0050(3) and 863-025-0025(16), for each deposit made under ORS 696.241, a property manager must obtain a deposit slip and make a written notation of the owner's identifying code assigned to the property management agreement on the deposit slip. As used in this rule, “deposit slip” means an independently verifiable third party document created by the third party at the time of the deposit.

(5) A property manager must maintain a complete record of all funds or other consideration received in the property manager's property management activity. This record must show from whom the funds or other consideration was received, the date of the receipt, the place and date of deposit, and, the final disposition of the funds or other consideration.

Stat. Auth.: ORS 696.385
Stats. Implemented: ORS 696.280 & 696.361
Hist.: REA 1-2002, f. 5-31-02, cert. ef. 7-1-02; REA 1-2003(Temp), f. 2-27-03, cert. ef. 2-28-03 thru 8-27-03; REA 3-2003, f. 7-28-03, cert. ef. 8-1-03; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09; REA 2-2010, f. 12-15-10, cert. ef. 1-1-11

863-025-0068

Owner Information Request

(1) Upon written request from a property owner, a property manager must deliver to the owner the information listed in subsections (a) through (e) of this section for each tenant within five business days of actually receiving the request for information, unless the owner and the manager agree to a different time period.

(a) The tenant’s name, mailing address, and phone number;

(b) The current rent amount and all scheduled tenant charges;

(c) An accounting of all security deposits and fees held for the tenant;

(d) The name of each utility provider and the account number for each provider; and

(e) The name of each fire and life safety service provider and the account number for each provider.

(2) Upon written request from a property owner, a property manager must deliver to the owner copies of the current rental or lease agreement, including all addenda and modifications, within five business days of the date of actually receiving the request for information, unless the owner and the manager agree to a different time period.

(3) For the purposes of this rule, to deliver information to the owner means delivering the information by U.S. Mail, by fax, or by sending it electronically to the owner at the address or number provided to the manager by the owner with the request for information. The information is considered delivered on the date it is mailed, faxed, or sent electronically.

(4) This rule is in addition to and does not replace OAR 863-025-0070 concerning the final accounting after termination of the property management agreement.

Stat. Auth.: ORS 696.385
Stats. Implemented.: ORS 696.280 & 606.381
Hist.: REA 2-2010, f. 12-15-10, cert. ef. 1-1-11

863-025-0070

Termination, Transfer of Property Management

(1) If a property management agreement is terminated, the property manager must terminate property management activity pursuant to the terms of the property management agreement and this rule.

(2) Not later than 60 days after the effective date of the termination, the property manager must:

(a) Disburse all obligated funds to the party or parties entitled to the funds; and

(b) Provide the owner with the following:

(A) A final accounting of the owner's ledger account;

(B) All funds belonging to the owner as shown on the owner’s ledger, unless the owner directs the property manager, in writing, to transfer the funds to another property manager, escrow agent or person;

(C) An accounting of all security deposits and fees held for tenants;

(D) All tenant security deposits and fees held for tenants, unless the owner directs the property manager, in writing, to transfer the security deposits and fees to another property manager, escrow agent or person;

(E) Copies of all current tenant rental or lease agreements, unless the owner waives such requirement in writing or directs the property manager, in writing, to provide such documents to another property manager, escrow agent or person; and

(F) A notice the property manager may destroy the required records of the property management activity performed after six years.

(3) No later than the next calendar day after the effective date of the termination, a property manager must notify each tenant for whom the property manager holds a security deposit that:

(a) The security deposit and all fees held for the tenant will be transferred to the owner or, if applicable, to another property manager, escrow agent or person; and

(b) The name and address of the owner, other property manager, escrow agent or person to whom these deposits will be transferred;

(4) A property manager may not expend any tenant security deposits for payment of any expenses or fees not otherwise allowed by the tenant's rental or lease agreement.

(5) If a tenant's termination of tenancy occurs simultaneously with or prior to the effective date of termination of the property management agreement, a property manager must complete any final accounting, inspection or other procedures within the time required by:

(a) The tenant rental or lease agreement;

(b) The Residential Landlord Tenant Act; and

(c) The property management agreement, unless the owner otherwise directs in writing.

(6) A property manager must transfer and assign by written agreement any interest of the property manager in a rental or lease agreement to the owner or to a new property manager.

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.280 & 696.361
Hist.: REA 3-1987, f. 12-3-87, ef. 1-1-88; REA 3-1989, f. 12-13-89, cert. ef. 2-1-90; REA 2-1991, f. 11-5-91, cert. ef. 1-1-92; REA 1-2002, f. 5-31-02, cert. ef. 7-1-02, Renumbered from 863-010-0225; REA 1-2005, f. 5-5-05, cert. ef. 5-6-05; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

863-025-0080

Compliance Reviews and Mail-in Audits

(1) The Agency will provide a property manager with written notice at least five business days before conducting a compliance review.

(2) A compliance review is completed when the Agency delivers a written notice of completion to the property manager.

(3) Except as provided in section (4) of this rule, if the Agency determines that a property manager is not in compliance with ORS 696.010 to 696.495, 696.600 to 696.785, 696.800 to 696.870, or OAR chapter 863 after the Agency completes a compliance review, the Agency will allow the property manager at least 30 days from the date the compliance review is completed to cure the noncompliance without sanction.

(4) Upon completion of a compliance review, if the Agency has reasonable grounds to believe that the funds of an owner or tenant may be missing, funds may have been misappropriated, or that the property manager’s records are in such a condition that the property manager is placing owners’ and/or tenants’ money at risk the Agency may immediately initiate an investigation without providing a property manager with an opportunity to cure noncompliance.

(5) The Agency will provide a property manager with written notice of a mail-in audit at least 30 days before required information and documentation must be provided to the Agency.

(6) After the Agency reviews the information and documents provided in a mail-in audit, the Agency will take one of the following actions:

(a) If the information and documents are in compliance with statutes and rules, the Agency will provide written notice to the property manager confirming compliance only as to the information and documents provided;

(b) If the information and documents indicate that the property manager may be subject to additional documentation and procedural requirements that were not part of the mail-in audit, the Agency will provide written notice to the property manager detailing the Agency’s expectations for compliance on those matters;

(c) If the information and documents demonstrate that the property manager is not in compliance with ORS 696.010 to 696.495, 696.600 to 696.785, 696.800 to 696.870, or OAR chapter 863, the Agency will provide written notice to the property manager that includes:

(A) The property manager must cure all noncompliance issues and provide information and documentation to the Agency that the noncompliance has been cured within 30 days of the date of the notice; and

(B) If all noncompliance issues are not cured within 30 days, the Agency may impose sanctions on the property manager or may initiate an investigation and not allow additional time for the property manager to cure the noncompliance.

(d) If the Agency has reasonable grounds to believe that the funds of an owner or tenant may be missing, funds may have been misappropriated, or that the property manager’s records are in such a condition that the property manager is placing owners’ and/or tenants’ money at risk, the Agency may immediately initiate an investigation without providing a property manager with an opportunity to cure noncompliance.

(7) If a property manager does not respond to a mail-in audit within the time period required in the notice, the Agency may initiate an investigation.

(8) The Agency may conduct a mail-in audit of a property manager:

(a) As part of a regular, routine and random selection of property manager clients' trust accounts for mail-in audits;

(b) When the Agency has determine, after a compliance review, that the property manager was not in compliance and provided the property manager with an opportunity to cure the non-compliance; and

(c) After an investigation has been initiated.

Stat. Auth.: ORS 183.335 & 696.385
Stats. Implemented: ORS 696.280 & 696.361
Hist.: REA 2-2006(Temp), f. 9-11-06, cert. ef. 9-15-06 thru 3-12-07; REA 1-2007, f. & cert. ef. 3-12-07; REA 8-2008, f.12-15-08, cert. ef. 1-1-09

The official copy of an Oregon Administrative Rule is contained in the Administrative Order filed at the Archives Division, 800 Summer St. NE, Salem, Oregon 97310. Any discrepancies with the published version are satisfied in favor of the Administrative Order. The Oregon Administrative Rules and the Oregon Bulletin are copyrighted by the Oregon Secretary of State. Terms and Conditions of Use

Oregon Secretary of State • 136 State Capitol • Salem, OR 97310-0722
Phone: (503) 986-1523 • Fax: (503) 986-1616 • oregon.sos@state.or.us

© 2013 State of Oregon All Rights Reserved​