State real estate education gets long-term boost

The program allows real estate brokers to voluntarily transfer interest earnings on their escrow accounts to a college's endowment for real estate education. Passed during the 1992 session and recently implemented at Mississippi State, the program goes by the acronym IREBEA. The letters stand for "interest on real estate broker's escrow account."

According to Dr. Donald Epley, holder of the Robert Warren Chair in Real Estate in the College of Business and Industry, the program is patterned after one the Mississippi Bar has been operating for several years.

The program is the only one of its kind in the United States set up to support education, Epley said, and it is a potentially "very significant" source of funding. Participation by real estate brokers is strictly voluntary, he emphasized.

Brokers maintain escrow accounts as a regular part of their businesses. The account usually is a buyer's monetary deposit put in care of a third party--a bank, for instance--and not delivered to the seller until the deal is closed.

"Traditionally, a separate interest-bearing account is opened if a client's or customer's deposit is large or is to be held for a length of time," Epley said. All other clients' deposits are usually co-mingled in a standard account.

When a broker participates in IREBEA, interest from the standard account is paid directly to a college's endowment for real estate education. At Mississippi State, the payment goes to the Robert Warren Chair administered by the university foundation.

"In that way, a permanent endowment is created and only the interest earned can be spent," Epley said. "No earnings can be made available to the broker."

IREBEA was written to avoid any tax consequence to the client, customer or broker, he said. "After reviewing our proposal, the Internal Revenue Service ruled that earnings specifically designated to the Mississippi State account are tax exempt."

Epley said that while interest earnings accrued from any one real estate office may not be large, the accumulation from all participating firms can mount up.

"This is the heart of the program," he said.

For additional information on the program, call Epley at 325-2341.