Key Takeaways
- Principal brokers must maintain clients' trust accounts at federally insured banks
- Trust accounts must be labeled "Clients' Trust Account" or "Client Trust Account" on all records
- OREA must be notified within 10 business days of opening, closing, or transferring a trust account
- Trust accounts must be reconciled monthly by the principal broker
- All trust account records must be maintained for 6 years
Oregon Trust Account Requirements
Oregon principal brokers must maintain clients' trust accounts to hold client funds separate from their operating funds.
Trust Account Basics
What is a Clients' Trust Account?
A clients' trust account is a bank account where principal brokers hold funds belonging to others:
| Fund Type | Examples |
|---|---|
| Earnest money deposits | Buyer's good faith deposit |
| Security deposits | Tenant deposits on rentals |
| Rent collections | Collected on behalf of landlords |
| Other client funds | Closing proceeds pending disbursement |
Where to Open
As of March 1, 2025, trust accounts must be at:
- A federally insured bank or credit union
- Must have Oregon presence or accessibility
Key Requirement: All clients' trust accounts must be at federally insured financial institutions.
Account Labeling
Trust accounts must be labeled on all bank records and checks:
| Acceptable Labels |
|---|
| "Clients' Trust Account" |
| "Client Trust Account" |
| "Clients' Trust Account - Security Deposits" |
| "Client Trust Account SD" |
OREA Notification Requirements
Opening an Account
Within 10 business days of opening a trust account:
- Notify OREA using online process
- Include information required by ORS 696.245
- Submit completed "Notice of Clients' Trust Account and Authorization to Examine"
Closing or Transferring an Account
Within 10 business days of closing or transferring a trust account:
- Notify OREA using online process
- Provide account closure/transfer details
Deposit Requirements
Timeline
| Situation | Deposit Deadline |
|---|---|
| Earnest money | Per contract terms |
| Security deposits | Within 5 banking days |
| Rent | Per property management agreement |
Proper Deposits
All client funds must be deposited into the principal broker's trust account - not:
- Broker's personal account
- Brokerage operating account
- Any non-trust account
Critical Rule: Only principal brokers can maintain clients' trust accounts. Brokers cannot hold client funds.
Security Deposits (Property Management)
Property managers have specific requirements for security deposits:
Separate Account Required
- Security deposits must be in a separate account from the clients' trust account
- Labeled as "Clients' Trust Account - Security Deposits" or "Client Trust Account SD"
Deposit Timeline
| Requirement | Timeline |
|---|---|
| Deposit security deposits | Within 5 banking days after receipt |
Interest-Bearing Accounts
Security deposits may be held in interest-bearing accounts if:
- Property management agreement allows it
- Tenant provides written approval (typically in lease)
Prohibited Practices
Commingling
Commingling is mixing client funds with principal broker's personal or business funds. It is strictly prohibited.
| Allowed | NOT Allowed |
|---|---|
| Client funds in trust account | Client funds in operating account |
| Small amount to maintain account | Large personal funds in trust account |
| Interest earned (per agreement) | Using client funds for business expenses |
Conversion
Conversion is using client funds for unauthorized purposes. It is a serious violation that can result in:
- License revocation
- Criminal charges
- Civil liability
Record Keeping Requirements
Required Records
Principal brokers must maintain:
| Record | Description |
|---|---|
| Bank statements | Monthly statements from financial institution |
| Deposit receipts | Documentation of each deposit |
| Check records | Documentation of each disbursement |
| Client ledgers | Individual records for each client |
| Transaction records | All transaction documentation |
| Interest records | Interest earned and credited (if applicable) |
Retention Period
| Requirement | Duration |
|---|---|
| Trust account records | 6 years minimum |
| Property management records | 6 years minimum |
Important: Oregon requires 6 years of record retention - longer than many states.
Monthly Reconciliation
Requirements
| Item | Details |
|---|---|
| Frequency | At least once per month |
| Who reconciles | Principal broker |
| Signature | Principal broker must verify, sign, and date |
| Outstanding checks | Must list by check number, date, payee, amount |
Reconciliation Process
- Obtain bank statement at end of month
- Compare bank balance to trust account records
- List all outstanding checks
- Identify any discrepancies
- Resolve discrepancies immediately
- Sign and date reconciliation
- Maintain documentation
Owner Restrictions
Owners cannot be authorized signers or have access to trust accounts:
| Restriction | Details |
|---|---|
| Authorized signer | Owner CANNOT be signer on trust account |
| Deposit/disburse | Owner CANNOT deposit or disburse funds |
| Access | Owner CANNOT have direct account access |
| Responsibility | Principal broker is solely responsible |
Bank Lockbox Process
A lockbox process is allowed if:
- Authorized in property management agreement
- Bank collects payments from tenants
- Bank creates electronic record
- Bank deposits into appropriate trust account
- Adequate security controls maintained
- Accurate accounting ensured
Who is authorized to maintain a clients' trust account in Oregon?
How long must Oregon principal brokers maintain trust account records?
Within how many business days must a principal broker notify OREA of opening a new clients' trust account?