Trust Account / Escrow Account
Definition
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
Example
When a buyer submits a $10,000 earnest money deposit with a purchase offer, the listing broker must deposit the check into the brokerage's trust account within the timeframe required by state law. The funds remain in the trust account until closing or until the contract is terminated.
Exam Tip
Trust account questions appear frequently on the exam and often involve timing of deposits and prohibited practices like commingling. Remember that a broker should never deposit client funds into their personal or operating account.
Related Practice Terms
Escrow Account Management
Brokers in Florida have strict responsibilities for managing escrow accounts, including monthly reconciliation and proper handling of trust funds.
Record Keeping Requirements
Florida brokers are required to maintain transaction records and escrow records for a minimum of five years.
Commingling and Conversion
Commingling is the illegal act of mixing client trust funds with a broker's personal or business operating funds; conversion is the misappropriation of those funds.
License Renewal Requirements
Florida real estate licenses must be renewed biennially, and sales associates have specific post-license education requirements for their first renewal.
FREC Disciplinary Authority
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
License Requirements
License requirements are the mandatory qualifications—including pre-licensing education, examination, and background checks—that a person must satisfy before legally practicing real estate. These requirements are established and enforced by each state's real estate commission.
Frequently Asked Questions
Test Your Practice Knowledge
Practice with exam-style questions to make sure you can apply Trust Account / Escrow Account and other practice concepts.