4.1 Wyoming Trust Account Requirements
Key Takeaways
- Responsible brokers must hold others' money in a trust/escrow account at a federally insured Wyoming institution, titled with "trust" or "escrow"
- Client funds must be deposited by the first banking day after receipt unless all parties agree otherwise in writing
- Salespersons may never hold client funds; only the responsible broker controls the trust account
- Commingling (mixing client and broker funds) and conversion (unauthorized use) are strictly prohibited and can lead to revocation and criminal charges
- Trust accounts require a monthly three-way reconciliation; disputed earnest money may not be released unilaterally
Wyoming responsible brokers must hold money belonging to others in a trust account that is kept completely separate from the broker's own operating funds. Trust-account rules (W.S. 33-28-122 and WREC rules) are among the most heavily tested and most frequently disciplined areas of Wyoming practice.
Trust Account Basics
What Is a Trust Account?
A trust account (also called an escrow account) is a bank account in which a responsible broker holds funds that belong to clients and customers — never the broker's own money.
| Fund Type | Examples |
|---|---|
| Earnest money | A buyer's good-faith deposit |
| Security deposits | Tenant deposits on managed rentals |
| Rent collections | Rent collected for landlord clients |
| Advance fees | Money collected before services are performed |
| Other client funds | Any money held on behalf of others |
Where to Open the Account
The trust account must be:
- At a federally insured financial institution,
- Located in Wyoming, and
- Of a type permitting immediate withdrawal (checking, demand, passbook, or statement account).
Account Naming
| Requirement | Detail |
|---|---|
| Must include the word | "trust" or "escrow" |
| Maintained in the name of | The responsible broker |
| Withdrawal | Must allow funds to be withdrawn without prior notice |
Key Requirement: The account title itself must contain the word "trust" or "escrow" so that, on its face, it is identifiable as fiduciary money and is shielded from the broker's creditors.
Deposit Requirements
| Situation | Deposit Deadline |
|---|---|
| All money belonging to others | The first banking day after receipt |
| Exception | Unless all parties agree otherwise in writing |
Who May Hold Funds
| Allowed | Not Allowed |
|---|---|
| Responsible broker's trust account | A salesperson's personal account |
| A designated funds holder, by written agreement | The broker's operating/business account |
Critical Rule: A salesperson cannot hold client funds. A salesperson who receives earnest money must promptly deliver it to the responsible broker, who deposits it. Only the responsible broker maintains and controls the trust account.
As an alternative to keeping its own trust account, a brokerage may use a designated funds holder (such as a title company) when the parties agree in writing — but the duty to ensure the money is handled correctly does not disappear.
Money Subject to Trust Account Rules
"Money belonging to others" is broad and includes, but is not limited to:
| Source | Example |
|---|---|
| Purchase transactions | Earnest money deposits |
| Property management | Rent and security deposits |
| Advance-fee contracts | Fees collected before services are rendered |
| Lease transactions | Tenant deposits |
| Held investments | Funds held for a later purpose |
Prohibited Practices
Commingling
Commingling is mixing client funds with the broker's personal or business funds. It is strictly prohibited.
| Allowed | Not Allowed |
|---|---|
| Client funds in the trust account | Client funds in the operating account |
| A small broker deposit to keep the account open (where permitted) | Large broker funds parked in the trust account |
| Interest disbursed per written agreement | Using client funds for business expenses |
Trap: Even temporarily routing a client's earnest money through the broker's operating account is commingling — the timing does not save it. Funds belonging to others go directly into the trust account.
Conversion
Conversion is using client funds for an unauthorized purpose — the most serious trust violation. It can lead to license revocation, criminal charges, civil liability, and a payment from the Recovery Account that the broker must repay with interest.
Commission Disbursement
| Rule | Detail |
|---|---|
| Earned commission | Withdrawn promptly once truly earned |
| Timing | Only after the transaction is consummated or terminated |
| Salesperson pay | A salesperson is paid by the broker, not directly from the trust account |
Important: No licensee is entitled to earnest money or compensation until the transaction is consummated or terminated. Pulling a commission out of escrow early is conversion.
Record Keeping
Brokers must maintain complete, current records available for WREC inspection:
| Record | Description |
|---|---|
| Account journal | Chronological record of all receipts and disbursements |
| Transaction ledger | A separate ledger for each transaction/beneficiary |
| Bank statements | Monthly statements |
| Reconciliation worksheets | Monthly proof that records agree |
| Deposit and check records | Documentation of each deposit and disbursement |
Transaction Ledger Detail
Each ledger should show the names of both parties, the dates and amounts received, the address and description of the real estate, and the date, payee, check number, and amount of every disbursement. Good ledgers let an auditor trace every dollar from receipt to payout.
Reconciliation Requirements
Wyoming requires monthly reconciliation of every trust account — the heart of trust-account compliance.
What Must Agree
A proper reconciliation proves a three-way match:
| Element | Must Match |
|---|---|
| Cash balance in the account journal | The reconciled bank balance |
| Sum of all individual ledger balances | The reconciled bank balance |
| Reconciled bank balance | Both of the above |
If the three figures do not agree, the broker has a shortage or overage that must be found and corrected — a discrepancy is a red flag for commingling or conversion.
The Reconciliation Worksheet
The worksheet must be prepared monthly, kept in hard copy or electronic form, list each beneficiary's ledger balance, and be available for inspection.
| Exception | When Allowed |
|---|---|
| No banking activity in a month | No reconciliation is required for that month |
Withdrawal Rules
| Situation | Action |
|---|---|
| Money due to the broker | Withdraw promptly once earned |
| Disputed funds | Do not unilaterally release; follow dispute procedures |
| Closing proceeds | Disburse per the closing instructions |
Trap on disputed earnest money: When buyer and seller fight over who gets the earnest money, the broker may not simply pick a side and pay out. The broker holds the funds and follows the dispute process (mutual written instructions, mediation, or interpleader into court).
Cooperative Transactions and Interest
| Situation | Handling |
|---|---|
| Buyer's broker receives a cash/check deposit | Delivers it to the listing broker for deposit |
| Promissory-note deposit | The listing broker holds the note |
| Different arrangement | Allowed if all parties agree in writing |
| Interest Feature | Wyoming Rule |
|---|---|
| Interest-bearing | The account may or may not bear interest |
| Disposition of interest | As agreed in writing by all parties |
Advance Fees
For money collected before services are performed:
| Requirement | Detail |
|---|---|
| Hold in trust | Until the services are actually performed |
| Withdraw | Only for actual expenses or after services are rendered |
| Account | Provide a full itemized accounting within the required time of any withdrawal |
Key Point: Trust money is sacred. Deposit it on time, never commingle, never convert, reconcile every month, and never release disputed funds on your own judgment. Trust-account failures are the fastest route to revocation in Wyoming.
By when must a Wyoming responsible broker deposit client funds into the trust account?
What word must appear in the name of a Wyoming real estate trust account?
How often must a Wyoming responsible broker reconcile the trust account?
Buyer and seller dispute who is owed the earnest money. What should the responsible broker do?