Key Takeaways
- Georgia brokers must maintain trust/escrow accounts in federally insured Georgia financial institutions
- Earnest money and client funds must be deposited within 3 banking days per GREC regulations
- Trust accounts must be reconciled at least monthly; records retained for 3 years
- Commingling (mixing personal and trust funds) is prohibited except for minimal service charges
- Brokers are not entitled to any portion of trust funds until the transaction is consummated or terminated
Trust Account Management in Georgia
Proper handling of client funds is one of the most important responsibilities of a Georgia real estate broker. Trust account violations are a leading cause of license discipline.
Trust Account Requirements
Account Setup
Georgia brokers must:
| Requirement | Specification |
|---|---|
| Account Type | Designated trust or escrow account |
| Location | Federally insured Georgia financial institution |
| Account Name | Must include "Trust" or "Escrow" |
| Registration | Must be registered with GREC |
| Protection | Account is NOT subject to garnishment |
Types of Funds Held in Trust
| Fund Type | Description |
|---|---|
| Earnest Money | Deposits on purchase contracts |
| Security Deposits | Rental property deposits |
| Rent Collections | When broker is property manager |
| Association Fees | For property management clients |
| Down Payments | Advance payments on transactions |
Deposit Timing
GREC Regulation: 3 Banking Days
Per Georgia regulations, trust funds must be deposited within 3 banking days of receipt.
Banking Days: Monday-Friday, excluding federal holidays. Saturday and Sunday are not banking days.
What Counts as Receipt
A broker "receives" funds when:
- Check is physically received
- Wire transfer is confirmed
- Cash is received (avoid cash when possible)
Delivery vs. Deposit
If the broker is not the holder, funds must be delivered to the proper holder (attorney, other broker) within 3 banking days.
Prohibited Practices
Commingling
Commingling is mixing trust funds with personal or business operating funds. It is strictly prohibited.
Exceptions:
- A broker MAY keep enough personal funds in the trust account to cover bank service charges
- The amount should be minimal and documented
Conversion
Conversion is using trust funds for personal purposes. It is:
- A serious violation
- Potential criminal offense
- Grounds for license revocation
Premature Disbursement
Brokers are not entitled to trust funds until:
- Transaction is consummated (closed), OR
- Transaction is terminated with agreement on fund distribution
Trust Account Maintenance
Reconciliation Requirements
| Task | Frequency |
|---|---|
| Bank statement reconciliation | Monthly (minimum) |
| Trial balance preparation | Monthly |
| Record retention | 3 years minimum |
Reconciliation Process
- Compare bank statement to check register
- Prepare trial balance of all transactions
- Identify and resolve discrepancies
- Document reconciliation date and findings
- Broker must sign off on reconciliation
GREC Audits
GREC may audit broker trust accounts:
- Randomly as part of routine oversight
- In response to complaints
- During license renewal investigations
Failure to maintain proper records is itself a violation.
Earnest Money Disputes
When parties dispute earnest money ownership:
- Hold the funds until dispute is resolved
- Do NOT disburse to either party without agreement
- Document the dispute and all communications
- Interpleader action - File with court if parties cannot agree
- Court will determine rightful owner of funds
Key Point: The broker is a neutral stakeholder. Do not take sides in earnest money disputes.
Within how many banking days must a Georgia broker deposit earnest money into a trust account?
How often must a Georgia broker reconcile their trust account?
When earnest money is disputed between buyer and seller, the broker should: