4.1 Oregon Trust Account Requirements

Why Trust Accounts Exist

A clients' trust account (CTA) is a separate bank account where a principal broker or licensed property manager holds money that belongs to other people — never the brokerage's own money. The legal foundation is ORS 696.241 (clients' trust accounts) and ORS 696.245 (notification and authorization to examine), implemented by OAR 863-015-0255 (real estate brokerage) and OAR 863-025-0025 (property management).

Whose money goes in the CTA?

Who may hold the account

This is the most-tested point: only a principal broker — or a separately licensed real estate property manager — may open and control a CTA. A regular (associate) broker may never hold client funds. An associate broker who receives an earnest-money check must promptly deliver it to the supervising principal broker, who deposits it. The property owner also may never be a signer on, or have direct access to, the trust account; the principal broker is solely responsible.

Trap: An exam vignette where a broker "deposits the earnest money into the trust account" is wrong unless that broker is a principal broker — associate brokers turn funds over.

Bank, Labeling, and OREA Notice

Federally insured Oregon institution

The CTA must be at a federally insured bank or credit union (FDIC or NCUA) located in Oregon. Foreign or non-insured accounts are not allowed. Every account, check, deposit slip, and bank record must be labeled so the funds are unmistakably client money.

Notify OREA within 10 business days

Under ORS 696.245, within 10 business days of opening, closing, or transferring a CTA, the principal broker must notify the Oregon Real Estate Agency (OREA) through the agency's online process and submit the Notice of Clients' Trust Account and Authorization to Examine. That authorization lets OREA examine the account during audits without a separate subpoena.

1. Open the account at a federally insured Oregon institution.
2. File the online CTA notice with OREA within 10 business days.
3. Repeat the 10-business-day notice for any closure or transfer.

Worked example: A principal broker opens a new property-management trust account on Monday, March 3. "Business days" exclude weekends and state holidays, so the notice is due by roughly March 17 — not 10 calendar days. Filing late is itself a violation.

Deposits, Separate Ledgers, and Prohibited Acts

Funding the account

Earnest money is deposited per the purchase agreement's instructions (typically promptly after acceptance). Security deposits collected in property management must be placed into the security-deposit CTA within a reasonable time after receipt and tracked on a per-tenant ledger. Interest may be earned only if the management agreement and lease authorize how interest is handled.

Commingling vs. conversion

Commingling is mixing client money with the broker's personal or operating funds — e.g., depositing rent into the brokerage's checking account. Conversion is the more serious act of using client money for an unauthorized purpose, such as paying office rent from earnest money. Conversion is theft and triggers both license revocation and criminal exposure.

Trap: A small broker-owned balance left in to satisfy a bank minimum is not commingling; using a tenant's deposit to cover the brokerage's payroll is conversion.

Records and the 30-Day Reconciliation

Required records (kept 6 years)

Oregon requires CTA and property-management records be retained 6 years — longer than many states' 3–5 years.

The reconciliation rule (commonly mis-stated)

The principal broker must reconcile each CTA within 30 calendar days of the date of the bank statement. The single reconciliation document must contain three components that agree: (1) the reconciled bank balance, (2) the checkbook/journal balance, and (3) the total of all client ledger balances. All three must match. A lockbox arrangement (the bank collects tenant payments electronically) is allowed only if the management agreement authorizes it and accurate accounting and security controls are maintained.

1. Obtain the month-end bank statement.
2. List outstanding checks by number, date, payee, and amount.
3. Sum all individual client/tenant ledgers.
4. Confirm bank balance = checkbook balance = ledger total.
5. Resolve any shortage immediately (a shortage is a red-flag violation).
6. Sign and date the reconciliation; retain it 6 years.

Trap: "Reconcile monthly" is loosely true, but the precise Oregon rule is within 30 days of the statement date — and the three balances must reconcile to each other, not just to the bank.