QUESTIONS AND ANSWERS ON TRUST ACCOUNTS
Q. What is the difference between a trust account and an escrow occount7
A. There is no difference, and therefore the terms can and often are used interchangeably.
Q. I maintain only one bank account for my real estate business, but I write the words "trust account" on all earnest money checks, checks for rental payments, etc. Is this permissible?
A. No. The purpose of the trust account is to separate trust funds from the other funds of the broker. There must be a separate trust account in addition to a broker's regular business account.
Q. What monies should I as a real estate broker place in my escrow account?
A. All money received in a real estate transaction when acting as a real estate broker, escrow agent, or the temporary custodian of the funds of others (G. S. 93A-6(a)(12)). For example, earnest money deposits, rental payments and damage deposits.
Q. Although 1. am a licensed real estate broker, I sometimes sell property which I personally own. Should I deposit into my trust account earnest money received from the sale of property which I personally own?
A. No. To do so would constitute "commingling" since you would be combining your own money with that of your principals, and such commingling could result in suspension or revocation of your real estate license.
Q. Is there a maximum time period within which trust funds must be deposited in my trust account?
A. Yes. "All monies received by a real estate broker acting in his fiduciary capacity shall be deposited in a trust or escrow account within 72 hours of receipt . . ." (North Carolina Real Estate Licensing Board Rule .0107(a)) UNLESS some other provision is written into the purchase agreement.
Q. May trust funds be deposited in an interest bearing account?
A. Yes, if the principals authorize such deposits in writing and if the writing provides for the disbursement of the interest (G. S. 93A-6(a)(12)). Brokers are advised to be sure that each written agreement clearly states to whom the interest belongs and to whom it will be disbursed. It is the Board's belief that the vast majority of brokers do not and should not deposit their trust funds in an interest bearing account unless the deposits are for large amounts of money which will be held for extended periods of time.
Q. I recently received my broker's license, but I do not plan to enter the real estate business at the present time. Must I open an escrow account even though I am not using my license?
A. No. An escrow or trust account, however, must he established prior to receipt of any trust funds in your capacity as a real estate broker.
Q. As a non-resident North Carolina broker, I occasionally transact real estate business in North Carolina. Must I deposit trust funds received in North Carolina in a North Carolina trust account?
A. Yes. Trust funds received in North Carolina or resulting from transactions conducted in North Carolina must be deposited in a trust or escrow account in an insured bank or savings and loan association in North Carolina (G. S. 93A-6(a)(12)).
Q. As a real estate broker, what should I do when a dispute arises between parties concerning trust funds?
A. You should KEEP THE MONEY IN YOUR TRUST ACCOUNT until the dispute is resolved to the satisfaction of all parties or until ordered by a court of competent jurisdiction to disburse the funds.
Q. Must I retain trust records for a minimum period of time?
A. Yes. Brokers must retain trust records and earnest money receipts for a period of 3 years (North Carolina Real Estate Licensing Board Rule.0108), and such records must be made available to the Licensing Board or its authorized representative when the Board determines such records are pertinent to the conduct of an investigation of any specific complaint against a licensee (G. S. 93A-6(c)).