4.1 Nebraska Trust Account Requirements

Nebraska designated brokers must hold money belonging to others in trust accounts, completely separate from their own operating funds. Trust-account rules are among the most heavily enforced in license law because they directly protect consumers' money.

What Is a Trust Account?

A trust account (also called an escrow account) is a bank account where a broker holds funds that belong to clients and customers - not to the broker.

Where the account must be held

Trust accounts must be maintained at an FDIC-insured (or otherwise federally insured) financial institution. The point is safety and traceability - funds sit in an insured, identifiable account, never in a shoebox or a personal account.

Core rule (heavily tested): Only the designated broker maintains the trust account. A salesperson may never hold client funds personally - any earnest money a salesperson receives must be turned over to the designated broker for deposit.

Deposit Requirements

Timing

When the same broker is both listing and selling broker, the 72-hour / next-banking-day rule applies. In a cooperative sale, the selling broker deposits within that window and then transfers the funds to the listing broker without delay.

Proper deposits only

All client funds go into the designated broker's trust account - never into:

• A salesperson's personal account,
• The broker's operating/business account, or
• Any other non-trust account.

Numeric anchor: The same 72-hour / next-banking-day deadline governs both earnest-money handling (Chapter 3) and trust deposits. Lock it in.

Interest-Bearing Trust Accounts

Trust funds may be placed in an interest-bearing account only with proper written authorization that states:

Important: Because interest-bearing trust accounts are not examined by NREC, the parties must knowingly consent in writing. The written notice of non-examination is part of that informed consent.

Direct Deposits and Disbursements

NREC rules permit direct deposits into a real estate trust account if a proper paper/audit trail exists - a receipt sent to the broker identifying the remitter. For disbursements:

Prohibited Practices

Commingling

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

A broker may keep a minimal amount of personal funds in the trust account to cover bank service charges or keep it open - but no more. Beyond that minimum, broker money in the trust account is commingling.

Conversion

Conversion is the more serious offense - using client funds for unauthorized purposes (e.g., paying the broker's bills with earnest money). Conversion can result in:

• License revocation,
• Criminal charges (theft),
• Civil liability, and
• Significant fines.

Record Keeping

Every designated broker must maintain records subject to audit, as detailed in the NREC Trust Account Manual: bank statements, deposit receipts, check records, individual client ledgers, and full transaction documentation.

Retention period

Numeric anchor: Nebraska's five-year retention is longer than some states. Original-medium records must be kept until NREC completes a trust-account examination and resolves any issues; afterward, examined records may move to non-rewritable alternative storage for the remaining period.

NREC Audits and Common Findings

NREC may audit a trust account at any time, without notice. Frequent findings and their typical consequences:

Trade name reminder: A broker operating under any name other than their own must register that trade name with the Secretary of State - e.g., "Smith Real Estate Co." must be registered, while a broker simply using their own legal name need not.