4.1 Oklahoma Trust Account Requirements
Key Takeaways
- A broker need not hold a trust account at all unless they accept money belonging to others; once they do, OAC 605:10-13-1 governs every dollar.
- All escrow funds must be deposited before the end of the third banking day following acceptance of the offer.
- Records are kept five years after consummation or termination; for trust records the clock starts on the date of disbursal, and originals must stay in original format for at least two years.
- Commingling is barred except for a small cushion of broker money sufficient to keep the account open and cover bank service charges.
- Interest-bearing escrow must be a demand account (no CDs or time deposits), with written disclosure naming who receives the interest.
Why Trust Accounts Exist
A trust account (also called an escrow account) is a bank account a broker uses to hold money that belongs to other people. The money is never the broker's, even while it sits in the broker's account. Oklahoma's controlling rule is Oklahoma Administrative Code (OAC) 605:10-13-1, "Duty to account; broker." On the state portion of the exam, expect three or four questions pulled straight from this rule.
When a Trust Account Is Required
The rule is permissive, not mandatory. A broker is not required to maintain a trust account unless they accept depositable items belonging to others. A listing-only broker who never touches earnest money may have no trust account at all. The moment a buyer's check lands, though, the full rule applies.
| Funds held in trust | Funds NOT held in trust |
|---|---|
| Earnest money on a purchase contract | The broker's commission once earned and released |
| Tenant security deposits | Office operating cash and payroll |
| Rent collected for an owner | Personal funds beyond the bank-charge cushion |
| Closing proceeds awaiting disbursal | Money the broker owns outright |
Account Requirements
| Requirement | Oklahoma rule |
|---|---|
| Institution | Federally insured — FDIC bank or NCUA credit union |
| Title | Styled as a "trust" or "escrow" account in the broker/firm name |
| Signatory | The broker must be a signer on the account |
| Type for interest | A demand account only; no certificate of deposit or time deposit |
| Security deposits | Must be escrowed in Oklahoma at a federally insured institution |
The Three-Banking-Day Rule
This is the single most tested number in the chapter. All escrow funds must be deposited before the end of the third banking day following acceptance of an offer by an offeree, unless all interested parties agree otherwise in writing.
Worked example. A buyer's offer is accepted on a Friday. Saturday and Sunday are not banking days. Banking-day one is Monday, two is Tuesday, three is Wednesday — so the check must be deposited by the close of business Wednesday. Counting calendar days here is the classic trap: a calendar-day reading would force a Sunday deposit and would be wrong.
Commingling, Conversion, and the Bank-Charge Cushion
Commingling is mixing client money with the broker's own money — for example, depositing earnest money into the operating account, or leaving large personal balances in the trust account. It is prohibited. Oklahoma allows exactly one exception: a broker may keep personal funds in the trust account only in an amount sufficient to maintain the integrity of the account and cover bank service charges. A test item that says "a broker may never have personal money in the trust account" is false because of this narrow cushion.
Conversion is worse — it is using client funds for an unauthorized purpose (paying office rent out of escrow, "borrowing" a deposit). Conversion can trigger license revocation, restitution, criminal charges, and a claim against the recovery fund.
| Permitted | Prohibited |
|---|---|
| Client funds held intact in escrow | Earnest money parked in the operating account |
| Small cushion for bank fees/integrity | Large personal balance in the trust account |
| Disclosed interest paid to a named party | Spending escrow on business or personal expenses |
Interest-Bearing Escrow
Oklahoma lets a broker place escrow in an interest-bearing account, but with guardrails:
- The account must be a demand-type account — a CD or other time deposit is prohibited because the funds must stay available.
- The broker must disclose in writing to all parties that the account earns interest and identify who receives the interest.
- The broker is not barred from keeping the interest, but only if that arrangement is disclosed and agreed.
Disputed Earnest Money
When buyer and seller fight over a deposit, the broker may not simply pay the more sympathetic party. The broker holds the money until (a) the parties sign a written release, (b) a court orders disbursal, or (c) the broker interpleads the funds by depositing them with the court. Self-help disbursal is a disciplinary violation.
Recordkeeping and Retention
Documentation is audited, so the numbers matter.
| Record | Retention rule |
|---|---|
| All transaction records and files | 5 years after consummation or termination |
| Trust account records | 5 years, counted from the date of disbursal of the funds |
| Original format | Must be kept in original format at least 2 years, then may move to alternative media |
Required records include monthly bank statements, deposit receipts, disbursement records, and an individual ledger for each client/transaction that always reconciles to the bank balance. The Oklahoma Real Estate Commission (OREC) may audit a trust account during any complaint investigation; a shortage is one of the most serious findings and routinely leads to suspension or revocation. Brokers must also notify OREC in writing each time a trust, escrow, security-deposit, or rental-management account is opened, closed, or changed, using the form OREC provides.
An offer is accepted on Friday. Under OAC 605:10-13-1, by when must the broker deposit the earnest money?
May an Oklahoma broker ever keep personal money in the trust account?
A broker wants escrow funds to earn interest. Which arrangement complies with Oklahoma rules?
How long must a broker retain trust account records, and when does the clock start?