Audit Staff
John Palo - Real Estate Specialist/Auditor
(785) 296-3411
John examines real estate company records in eastern Kansas. He has
served in this position since 2004.
Paul Smeltzer - Real Estate Specialist/Auditor
(785) 296-3411
Paul examines real estate company records in southern Kansas. He has
served in this position since 1995.
Examinations of Real Estate Offices
- Three Commission employees travel the state to examine records in
approximately 2,500 real estate offices.
- A 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, that there are
no unauthorized or early disbursements, and that funds are not commingled
or converted to personal use.
- Examiners also review contracts and other documents in transaction
files and monitor compliance with law and regulations.
Having A Successful Audit
Regulations to Remember
-
Regulation 86-3-10
all records relating to the broker's real estate business are to
be retained in the broker's files for three years
-
Regulation 86-3-22
transaction numbers are to be assigned and placed on all applicable
records
-
Regulation 86-3-18
if the broker maintains a trust account, a complete record of all
monies received or escrowed on real estate transactions must be
maintained
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Examination by Real Estate Commission
When a representative of the Real Estate Commission arrives in your
office to examine your records, he or she will ask for records for a
specified period of time. The examiner will review transaction files
and, if applicable, trust account records.
Transaction Files
Each transaction file whether PENDING, CLOSED OR CANCELED should contain
all of the following records IF APPLICABLE to the transaction:
- agency agreement with seller
- agency agreement with buyer
- transaction broker addendum
- transaction brokerage agreement
- offers, counteroffers
- contract
- lot reservation agreement
- commercial lease
- option
- 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
Trust Account Records
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
- date of each deposit
- check number
- date of check
- payee
- amount of each disbursement
- the current balance
- a ledger for broker's funds, if applicable
Reconciling Trust Account Records
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.
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Who to Contact
Wendy Alkire, Special
Investigator (785) 296-7891 Wendy.Alkire@krec.state.ks.us
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