As a real estate professional, knowing your forms inside and out is key to providing great service, protecting your business, and ensuring compliance. One form you don’t want to skip is OREA Form 320, also called the Confirmation of Cooperation and Representation. This form is essential for setting clear expectations in transactions and helping ensure financial transparency.
This guide will walk you through Form 320’s key components, when and why you should complete it, and practical tips to ensure it’s used correctly.
What Does Form 320 Do?
Under TRESA 2002 Act, Form 320 helps clarify who is representing whom in a real estate transaction. It specifies the relationships between the buyer, seller, and their real estate agents and brokerages. It details how commissions are allocated between cooperating brokers.
From an accounting standpoint, the form is essential for tracking commission splits, ensuring proper payment allocations, and maintaining transparency in financial records. The primary goal is to establish clarity in both representation and financial arrangements.
Key Details and Requirements of the Form
To ensure accuracy and compliance, pay attention to these:
- Who’s Working With Who: Specify the representation (buyer, seller, or both) to avoid conflicts.
- Commission Arrangements: Clearly define how commissions are shared between brokers. This prevents disputes and supports accurate entries in trust and operational accounts.
- Required Information: Include all relevant details, such as buyer and seller names, agreed commission percentages, and any specific cooperation terms. This ensures proper documentation for audit purposes.
- Disclosure of Relationships: Identify potential conflicts, such as family member connections, which could impact compliance or trust.
When Should You Use OREA Form 320?
You should fill out Form 320 as soon as possible, but no later than when you officially take on an agency role. This means completing the form early, once you know whether you’ll be representing the buyer, the seller, or both.
You also need to let others involved in the deal, like cooperating brokers, know your role when it’s relevant. Doing this early keeps everything transparent, helps prevent confusion, and ensures compliance with industry regulations.
Why Form 320 Helps With Accounting
Using Form 320 can help prevent common issues in real estate accounting:
- Commission Disputes: Provides a written record of agreed commissions, preventing changes after the fact.
- Trust Account Mismanagement: Ensures commissions are processed through appropriate trust accounts as required by regulations.
- Verbal Agreements: Replaces informal agreements with binding documentation, reducing risk.
- Roles Confusion: Clearly outlines representation roles, reducing liability.
- Incomplete Financial Records: Serves as supporting documentation for bookkeeping and audit trails.
Tips for Compliance When Completing OREA Form 320
To protect your business and clients:
- Explain Clearly: When discussing the form with your clients, make sure they understand its purpose and how it affects them. Use simple language and make sure they’re comfortable with what they’re signing.
- Review Carefully: Before submitting or signing the form, double-check all the details.
- Be Transparent: The more open and clear you are about your role and any agreements, the more your clients will trust you.
- Partner with Experts: Work with bookkeeping professionals to ensure all transactions align with trust accounting standards.
Conclusion
Using OREA Form 320 correctly helps ensure transparency and clarity in real estate transactions, reducing the risk of misunderstandings and legal issues.
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