Requires brokers who receive monies in a fiduciary capacity to deposit such monies in an interest on broker account

BILL NUMBER:S248

Title of bill

An act to amend the real property law and the state finance law, in relation to brokers fiduciary funds

Purpose or general idea of bill

To direct real estate brokers to hold escrowed monies in certain specialized accounts.

Summary of specific provisions

This bill would direct real estate brokers to hold all escrowed monies held for the benefits of others in specialized Interest On Brokers Accounts (IOBA), patterned after Interest On Lawyers' Accounts (IOLA). All interest earned from IOBA accounts would flow to the benefit of civil legal service funding,

Justification

In 1993 Judiciary Law Sec. 497 was enacted, which provided for attorney's escrow monies to be held in specialized IOLA accounts. The interest proceeds from these accounts were then used to fund much needed civil legal services. It is submitted that the extension of these accounts for the benefit of civil legal services would be a sensible and logical step which would likewise benefits those with civil legal service needs, but without the resources to pay for same. This bill extends the similar guidelines to financial institutions and brokers applicable to said funds as had been made applicable to attorneys pursuant to the aforementioned IOLA legislation.

Prior legislative history

S.1715 of 2011 01/11/11 REFERRED TO JUDICIARY 01/04/12 REFERRED TO JUDICIARY

Fiscal implications for state and local governments

None.

Effective date

This act shall take effect immediately; provided, however, that the provisions of section one of this act shall not take effect until the board of trustees of the IOLA fund established under the provisions of section 97-v of the state finance law, as added by chapter 659 of the laws of 1983, shall have certified to the Secretary of State that the Commissioner of Internal Revenue of the United States has ruled interest earned on an interest on broker account is not includable in the gross income of either the broker maintaining the account or the gross income of the beneficial owner; provided further, that the Secretary of State shall notify the Legislative Bill Drafting Commission as to whether or not the office of the Secretary of State has timely received such certification in order that the Commission may maintain an accurate and timely effective data base of the official text of the laws of the State of

New York in furtherance of effecting the provisions of section 70-b of the public officers law.