For the broker who would like one good reason why he should deposit his clients' funds in a separate account", here are four good reasons:

1. Funds on deposit in a broker's regular business account or personal account may be "frozen" should the broker become involved in legal action or should he become incapacitated or die;
2. Only by depositing client funds in a separate trust or escrow account can each depositor receive the $40,000 maximum insurance protection of the Federal Deposit Insurance Corporation (brokers must also be able to identify each depositor);

3. By depositing trust funds "in a separate account and maintaining a separate accounting journal for such account, brokers will be less likely to confuse trust monies with non-trust monies; and

4. Failure to deposit such funds in a trust/escrow account Is a serious violation of the Real Estate Licensing Law and could likely result in the suspension or revocation of the broker's real estate license.

Protect your clients. Protect yourself. Deposit in your trust account within 72 hours of receipt any earnest monies, rents, rental security deposits, and all other funds received by you while acting as a real estate broker. Do not deposit in your trust account any monies received by you while acting for yourself (as seller, lessor, etc.), and promptly transfer (within 30 days) all earned commissions from your trust account to your business account. Finally, should a dispute arise between parties as to the proper disposition of trust funds, do not disburse the funds until the dispute has been settled or until you have been advised by legal counsel or instructed by a court of competent jurisdiction.