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Key Takeaways

  • Indiana brokers must maintain trust accounts in Indiana financial institutions
  • Earnest money and client funds must be deposited promptly upon acceptance
  • Trust accounts must be reconciled monthly with records retained for 5 years
  • Commingling personal and trust funds is prohibited
  • Conversion of trust funds is a criminal offense and grounds for license revocation
Last updated: January 2026

Trust Account Management in Indiana

Proper handling of client funds is one of the most important responsibilities of an Indiana real estate broker.

Trust Account Requirements

Account Setup

RequirementSpecification
Account TypeTrust or escrow account
LocationIndiana financial institution
Account NameMust be designated as trust/escrow
Interest-bearingPermitted with proper disclosure
FDIC InsuredRequired

Types of Funds Held in Trust

Fund TypeDescription
Earnest MoneyDeposits on purchase contracts
Security DepositsRental property deposits
Rent CollectionsWhen broker manages property
Option FeesFor lease-option arrangements
Down PaymentsAdvance payments on contracts

Deposit Requirements

Timeline: Prompt Deposit

Indiana requires trust funds to be deposited promptly upon receipt.

GuidelineAction
Day 0Receive earnest money
PromptlyDeposit per office policy
Best PracticeWithin 3 business days

Business Days

Business days exclude:

  • Saturdays
  • Sundays
  • State and federal holidays

What Constitutes Receipt

A broker "receives" funds when:

  • Check is physically received
  • Wire transfer is confirmed
  • Cash is received (document immediately)

Prohibited Practices

Commingling

Commingling is mixing trust funds with personal or business funds. It is strictly prohibited.

PermittedProhibited
Keeping minimal funds to cover bank feesMixing personal funds in trust
Separate trust accountUsing one account for all

Conversion

Conversion is using trust funds for personal purposes:

  • Serious violation
  • Criminal offense
  • Grounds for immediate revocation
  • May result in prosecution

Premature Disbursement

Brokers cannot disburse trust funds until:

  • Transaction is consummated (closed)
  • Transaction is terminated with agreement
  • Court order directs disbursement

Trust Account Maintenance

Reconciliation Requirements

RequirementFrequency
Bank reconciliationMonthly
Trial balanceMonthly
Discrepancy resolutionImmediately
Broker reviewEach reconciliation

Record Retention

Record TypeRetention Period
Trust account records5 years
Bank statements5 years
Deposit records5 years
Disbursement records5 years

Earnest Money Disputes

When Parties Disagree

When buyer and seller dispute earnest money:

  1. Hold the funds - Do not disburse
  2. Document the dispute - Written record
  3. Attempt resolution - Mediation encouraged
  4. Interpleader - File with court if no resolution
  5. Court decides - Judge determines rightful owner

Interpleader Action

StepAction
File with courtDeposit funds with court
Name both partiesBuyer and seller
Broker withdrawsNo longer holds funds
Court decidesAfter hearing

Important: The broker is a neutral stakeholder. Never take sides in earnest money disputes.

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Indiana Trust Account Flow
Test Your Knowledge

When must an Indiana broker deposit earnest money into the trust account?

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D
Test Your Knowledge

How often must Indiana brokers reconcile their trust accounts?

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D
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