June 2024
A clients’ trust account is an account opened and maintained in your fiduciary capacity as a licensed property manager or principal broker. You may not commingle your personal or business funds with funds held in this account. The account must be designated as a clients’ trust account by labeling it according to the type of funds held in the account.
There are three types of clients’ trust accounts: an owner account, security deposit account, and a real estate transaction account. We’ll focus on the two used in property management, the owner account and the security deposit account
Owner accounts
Whether you are a property manager or principal broker managing rental real estate, you are required to open at least one owner account. This account is for holding and disbursing owner funds. Rent payments, non-refundable deposits, and other fees must run through this account. These funds can only be disbursed according to the property management agreement. You must designate this as a clients’ trust account by ensuring all bank records and checks include the labeling “Clients’ Trust Account” or “Client Trust Account.”
You can make the business decision to open a separate account for each individual owner or open a single account maintained for multiple owners.
Security deposit accounts
If you are responsible for holding and maintaining tenant security deposits, you must open a security deposit account separate from the owner account. Only security deposits may be held in this account. You must designate this as a clients’ trust account by ensuring all bank records and checks include the labeling: “Clients’ Trust Account – Security Deposits” or “Client Trust Account SD”.
Don’t Forget
- Label your accounts correctly.
- Do not hold personal and business funds in a clients’ trust account.
- Register all clients’ trust account with the Agency in eLicense.
- Ensure that all terms and conditions are agreed to in the property management agreement. No handshake deals!
- Reconcile your accounts monthly. You must complete a three-way reconciliation for security deposit accounts and multiple owner accounts.
Opening and maintaining a clients’ trust account is essential for managing rental real estate. Failure to comply with the required accounting and recordkeeping can result in disciplinary action against your license.
For more information, review the Oregon Real Estate Agency’s
Welcome to Property Management and
Oregon Administrative Rule chapter 863 division 25.