4.1 North Dakota Trust Account Requirements

North Dakota brokers must hold money that belongs to others — earnest money, deposits, rents — separate from their own funds in a trust account. Trust-account rules are among the most heavily tested and most heavily disciplined areas of North Dakota license law (NDCC 43-23 and NDAC 70-02-01-15).

What a Trust Account Holds

A trust account (escrow account) is a bank account where the broker holds funds belonging to clients and customers.

Critical rule: Only a broker maintains a trust account. A salesperson may never hold client funds — any earnest money a salesperson receives must be promptly delivered to the broker.

Account Requirements

Correction/clarity: North Dakota trust accounts must be non-interest-bearing. A broker may not earn interest on clients' money; structuring the account to do so would itself be a violation.

The 24-Hour Deposit Rule

The 24-hour earnest-money deadline is one of North Dakota's signature numbers and reappears from the contracts chapter. As an alternative, the contract may direct that earnest money go directly to a title company, in which case the title company holds it — but the broker must still track the earnest money for all transactions and keep records even when not personally holding the funds.

Exam trap: "Within 24 hours unless the contract specifies otherwise" — not 48 or 72 hours.

Commingling and the $500 Exception

Commingling means mixing client funds with the broker's personal or business funds. It is strictly prohibited.

The $500 exception: A broker may deposit and keep a sum not exceeding $500 of personal funds in the trust account, specifically identified, to cover bank service charges. Anything more is commingling.

Conversion is worse: using client funds for an unauthorized purpose (e.g., paying the broker's own bills with earnest money). Conversion can trigger license revocation, criminal charges, civil liability, and a Recovery Fund claim.

Recordkeeping and Required Notifications

Brokers must notify NDREC within 10 days of any change in the depository (bank), account number, business name, or method of doing business. Each broker must also authorize NDREC to examine and audit the trust account, completing an authorization/attestation form and consenting to examination by NDREC representatives.

Audits, Disbursement, and Abandoned Funds

Disbursement: release funds per the contract when a deal closes or cancels; in a dispute over earnest money, the broker holds the funds until the parties agree in writing or a court orders release — the broker does not pick a side.

Abandoned/unclaimed funds: trust money unclaimed for the statutory period (generally three years after it becomes payable) is presumed abandoned and must be reported and delivered to the state administrator of unclaimed property under NDCC Chapter 47-30.1.

Exam tip: For a disputed deposit, the safe answer is always "the broker holds the money until the parties agree or a court decides" — never "the broker keeps it" or "returns it to the buyer" unilaterally.

Worked Example: A Salesperson Receives Earnest Money

A salesperson takes a $4,000 earnest-money check from a buyer on a Saturday. The salesperson cannot deposit it into their own account and cannot hold it personally — they must deliver it to the broker, who deposits it into the non-interest-bearing trust account within 24 hours of the broker's receipt, unless the purchase agreement directs the funds to a title company instead. If the deal later collapses and the buyer and seller disagree over who gets the $4,000, the broker holds the funds and disburses only on the parties' written agreement or a court order.

If the broker instead spent the $4,000 on office rent, that is conversion — grounds for revocation, criminal exposure, and a possible Recovery Fund claim.

Exam tip: Three numbers anchor this section — 24 hours to deposit, $500 personal-fund service-charge exception, and 3 years before trust funds are presumed abandoned under NDCC 47-30.1.