Can an agent have her own trust account?

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01/27/2015 | Author: Editorial Staff

An agent in my office wants to begin a full-service property-management practice. Can she have her own trust account to collect and disburse security deposits, rents, and other funds?

No. TREC rules make it clear that salespeople cannot have their own trust account. A broker may only authorize another license holder to withdraw or transfer funds from a trust account, but the broker herself remains responsible for all deposits to and disbursements from the broker’s trust account. Remember, a broker is responsible for all authorized acts of sponsored salespeople. You and your agent should review TREC Rule Section 535.146 before she begins her practice.

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Categories: Legal
Tags: trust accounts, legal faq, broker


Comments

David Davis on 02/01/2015

Alessandro, If you are in a small town, you will find this with small town and local banks.  They do not understand the situation.  As Richard points out, there is no need for a specific type of account.  This becomes a case of substance over form.  It is a matter of how you operate the account(s).  You may have to consider a different bank.

Nathan, The rules apply regardless of who owns the property, if the Broker (or an Associate) is performing property management services, regardless of weather or not the broker is paid a fee for those services.

Kim on 01/31/2015

I have three accounts for my prop. mgmt co.  1.) Operating account where owners/property bills/vendors are paid from, rents are received and owner draws are paid from.  2.) Mgmt account where the mgmt co pays its bills from, agent commissions,  employees are paid, and where management fees are deposited etc.  3.)  Sec Dep account where all security deposits are held.  They are all checking accounts label in the above manor.  As far as protection, I would think a LLC would do the trick.  You might want to talk to a Real Estate Attorney and ask his advise.  You can also call the TREC attorney line and ask for advise.

Nathan on 01/28/2015

What if it is for properties that the agent owns him or her self?

Alessandro on 01/28/2015

Thank you Richard for the clarification.

Richard Weeks on 01/28/2015

Alessandro there does not need to be a specific type of account at a bank called a “trust account”.  What one must do is simply identify the account a being a trust account.  It can be a checking account or a savings account, you just need to be able to prove that it is in fact a “trust account” for your property management activity.  I suggest you read and become familiar with TREC rule 535.146

Alessandro on 01/27/2015

Bankers in my town are not familiar with Trust accounts for Property Managers.  I try to explain the money in the account needs to be protected against bankruptcy or IRS, but they don’t say a product like that exist.  Has anyone else had this problem.  They insist opening a business account and label the account Trust.  I don’t think that is correct.  Can someone shed some light on this subject.


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The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

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