Key Takeaways

  • Principal brokers must maintain a trust account at a Hawaii financial institution for client funds
  • All client funds (earnest money, security deposits, rent) must be deposited into the trust account
  • Commingling broker funds with client funds is strictly prohibited
  • Trust account records must be maintained for at least 3 years
  • HIREC has authority to audit trust accounts at any time without notice
Last updated: January 2026

Hawaii Trust Account Requirements

Hawaii principal brokers must maintain trust accounts to hold client funds separate from their operating funds.

Trust Account Basics

What is a Trust Account?

A trust account (also called an escrow account) is a bank account where principal brokers hold funds belonging to others:

Fund TypeExamples
Earnest money depositsBuyer's good faith deposit
Security depositsTenant deposits on rentals
Rent collectionsCollected on behalf of landlords
Other client fundsClosing proceeds pending disbursement

Where to Open

Trust accounts must be at:

  • A Hawaii-chartered bank or credit union
  • A federally-insured institution with Hawaii branches
  • Account must be designated as "trust" or "escrow" account

Key Requirement: The account name must clearly identify it as a trust account.

Who Must Maintain Trust Account

PersonTrust Account Responsibility
Principal BrokerRequired - maintains trust account
Associate BrokerCannot maintain own trust account for brokerage
SalespersonCannot maintain trust account

Critical Rule: Only the principal broker can maintain and control the trust account. Salespersons and associate brokers must immediately turn over all client funds to the principal broker.

Deposit Requirements

Timeline

SituationDeposit Deadline
Earnest moneyPer contract terms (typically within 5 business days of acceptance)
Security depositsPer lease agreement terms
RentPer management agreement

Proper Deposits

All client funds must be deposited into the principal broker's trust account—not:

  • Salesperson's personal account
  • Broker's operating account
  • Any other non-trust account
  • Personal safe or drawer

Prohibited Practices

Commingling

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

AllowedNOT Allowed
Client funds in trust accountClient funds in operating account
Small broker amount to maintain accountLarge broker funds in trust account
Separate client ledgersMixing clients' funds without records

Conversion

Conversion is using client funds for unauthorized purposes. It is a serious violation that can result in:

  • Immediate license suspension
  • License revocation
  • Criminal charges (theft/embezzlement)
  • Civil liability
  • Payment from Recovery Fund

Common Trust Account Violations

ViolationDescription
ComminglingMixing personal and client funds
ConversionUnauthorized use of client funds
Late depositsNot depositing within required time
Poor recordsInadequate documentation
Unauthorized disbursementReleasing funds incorrectly

Record Keeping

Required Records

Principal brokers must maintain:

RecordDescription
Bank statementsMonthly statements from financial institution
Deposit receiptsDocumentation of each deposit
Check recordsDocumentation of each disbursement
Client ledgersIndividual records for each client
Bank reconciliationMonthly reconciliation of account
Transaction recordsAll transaction documentation

Retention Period

RequirementDuration
Trust account records3 years minimum
Transaction files3 years minimum
Listing agreements3 years after expiration

HIREC Audits

HIREC has authority to:

  • Audit trust accounts at any time without notice
  • Review records during investigations
  • Take immediate action if shortage discovered
  • Suspend license if serious violations found

Common Audit Findings

IssueConsequence
Shortage of fundsSerious violation—immediate suspension
Poor record keepingWarning to suspension
Late depositsWarning to fine
ComminglingFine to revocation
ConversionRevocation and criminal referral
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Hawaii Trust Account Fund Flow
Test Your Knowledge

Who is authorized to maintain a trust account for client funds in Hawaii?

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Test Your Knowledge

How long must Hawaii principal brokers maintain trust account records?

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Test Your Knowledge

What is commingling in real estate trust account management?

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