Which records related to a brokerage trust account are typically required to be maintained?

Trust account record requirements are extensive because of the fiduciary nature of holding client funds. Required records typically include: (1) BANK STATEMENTS: Monthly statements from the trust account bank; (2) DEPOSIT RECORDS: Deposit slips, copies of deposited checks (for audit trail); (3) TRANSACTION LEDGER OR JOURNAL: A running record of all deposits and disbursements with date, party, transaction reference, amount; (4) INDIVIDUAL CLIENT LEDGERS: A separate ledger for EACH transaction or client showing every credit (deposit) and debit (disbursement), with running balance; (5) CHECK REGISTERS / DISBURSEMENT RECORDS: For each check or wire transfer disbursing funds, with date, payee, amount, and reference; (6) RECONCILIATION RECORDS: Monthly reconciliation showing bank statement balance, broker's ledger balance, and any outstanding items, plus reconciliation of individual ledgers to total; (7) SOURCE DOCUMENTS: Earnest money receipts, copies of checks received, closing statements showing disbursement; (8) WRITTEN AUTHORIZATIONS: For unusual disbursements or holding instructions. MONTHLY RECONCILIATION (typically required in most states): Compare (1) bank statement balance + outstanding deposits − outstanding checks = adjusted bank balance; (2) sum of all individual ledger balances should equal adjusted bank balance; (3) any discrepancy must be investigated immediately. The broker should sign the reconciliation.

Periodic audit: Some states audit randomly or upon complaint; the broker must produce all records within the requested timeframe (often 14-30 days).

Electronic records: Most states accept electronic records if they meet integrity standards (cannot be altered without audit trail, can be reproduced). Many brokerages use specialized real estate trust account software (e.g., Lone Wolf, Skyslope, dotloop financial modules).

Duration of retention: Trust account records typically must be kept for at least 3-7 years from the transaction (varies by state). Some states require longer.

What gets deposited: (1) Earnest money from buyers; (2) Rent collected on managed properties (separate property management trust account typically required); (3) Security deposits for managed properties; (4) Funds for repairs or other purposes held in trust; (5) Some states allow nominal broker funds (up to $100-1000) to keep the account open. NEVER DEPOSITED into trust: broker's commissions, brokerage operating funds (except minimum as allowed), personal funds.

Audit concerns: Auditors look for: (1) Comingling; (2) Missing funds; (3) Untimely deposits; (4) Improper disbursements; (5) Incomplete records; (6) Failure to reconcile.