Under Ohio law, a real estate brokerage must maintain a trust or special account to hold monies belonging to other parties. Brokers engaging in property management must have a separate trust account for funds related to that activity.
Duty to Maintain
- All brokers must maintain a non-interest bearing “special” or trust account that is separate and distinct from any personal, operating, or other account of the broker (Ohio Revised Code (4735.18(A)(26)). Details regarding the handling of earnest money is set forth in detail in OAR’s Earnest Money White Paper.
- All monies received in a fiduciary capacity, including earnest money, escrow funds etc., must be deposited in this account.
- The trust or special account must be in a financial institution located in the state of Ohio.
- The account must be in the broker’s name as it appears on his license and must be labeled a “trust account” or “special account” and all checks and deposit tickets must contain those words as well (“Escrow account” is not acceptable) (Ohio Administrative Code 1301:5-5-08(B)).
- The name, account number and location of the financial institution where the account is maintained must be submitted in writing to the Division of Real Estate and Professional Licensing.
- Brokers may maintain more than one trust or special account.
Broker’s Own Funds
Brokers may not deposit or commingle their own funds in the trust or special account.
However, a broker is a permitted to deposit and maintain his own funds in the trust account if they are clearly identified as such and are deposited for one of the following purposes:
- If the financial institution where the account is located requires a special minimum balance that must be maintained in order to keep the account open, the broker may maintain that amount in the account as long as it is designated as the broker’s funds.
- If the financial institution where the account is located charges a service fee for the account, the broker may maintain a reasonable amount to cover the service charge. (Ohio Administrative Code 1301:5-5-08(C))
Required Trust Account Records
Brokers must maintain a record of all trust funds that are received. These records must be kept in columnar form and must include the following minimum information:
- Date funds are received;
- Party from whom funds are received and the purpose of the funds;
- Amount received;
- Date funds are deposited in special or trust bank account;
- Check number and date funds are disbursed;
- Party to whom funds are disbursed and purpose of disbursement;
- Any other documents necessary and sufficient to verify and explain record entries and identify the current balance in the special or trust bank account. (Ohio Administrative Code 1301:5-5-09)
Property Management Trust Accounts
Brokers engaging in property management must establish and maintain a separate trust account for fiduciary funds received in the course of managing real estate. (Ohio Administrative Code 1301:5-5-11)
This account must be in the name of the broker as it appears on his license and must be designated as a “Property Management Trust Account”. This is discussed in detail in OAR’s White Paper on Property Management.