agency

trust account

A separate bank account a broker maintains to hold money belonging to others, such as earnest money deposits, security deposits, and rents. Trust funds must be kept apart from the broker's business and personal funds and accounted for carefully. Mixing them is commingling, and using them for the broker's own purposes is conversion. Detailed rules vary by state.

Exam tip: Commingling is mixing; conversion is spending. Many states allow only a small broker-owned amount in the trust account to cover bank fees.
Example: A buyer's $10,000 earnest money check is deposited into the broker's escrow trust account, not the brokerage's operating account.

1. A broker's trust account bank statement shows $48,250. Deposits in transit total $6,000 and outstanding checks total $2,750. What adjusted bank balance should match the broker's trust ledger?

Answer & explanation

Answer: D. Adjusted bank balance = statement balance + deposits in transit - outstanding checks = $48,250 + $6,000 - $2,750 = $51,500. $45,000 reverses the adjustments.

Related terms & state variants

commingling conversion earnest money escrow account

Sources

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Last verified: 2026-10-23