Key Takeaways
- Kansas brokers must maintain a trust account at a Kansas-located financial institution for holding client funds
- Trust funds must be deposited within 5 banking days of receipt
- Commingling (mixing personal and trust funds) is prohibited except for a minimal amount to keep the account open
- Accurate records must be kept for all trust account transactions and retained for 5 years
- KREC can audit trust accounts at any time without prior notice
Last updated: January 2026
Kansas Trust Account Requirements
Kansas brokers who handle client funds must maintain a trust account and follow strict KREC regulations for handling other people's money.
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Trust Account Basics
What is a Trust Account?
A trust account (also called an escrow account) is:
| Feature | Description |
|---|---|
| Purpose | Hold client funds separate from broker's funds |
| Ownership | Funds belong to clients, not broker |
| Location | Must be in Kansas financial institution |
| Type | Demand deposit (checking) account |
When Trust Account Required
A broker must maintain a trust account when:
| Situation | Trust Account Needed |
|---|---|
| Handling earnest money | Yes |
| Collecting rent for owners | Yes |
| Managing security deposits | Yes |
| Holding funds for clients | Yes |
| Commission payments | No (broker's own funds) |
Trust Account Rules
Account Requirements
| Requirement | Details |
|---|---|
| Location | Kansas bank, savings & loan, or credit union |
| Account type | Demand deposit (checking) |
| Signatory | Broker or designated person |
| Title | Must clearly indicate "trust" or "escrow" |
Deposit Requirements
| Rule | Details |
|---|---|
| Timing | Within 5 banking days of receipt |
| Form | Per contract terms |
| Receipt | Provide written receipt if requested |
| Documentation | Record all deposits |
Key Point: The 5 banking days deadline begins when the broker receives the funds, not when the contract is signed.
Prohibited Practices
Commingling
Commingling is mixing trust funds with personal or business funds:
| Prohibited | Allowed |
|---|---|
| Broker's personal funds in trust | Minimal amount to keep account open |
| Business operating funds in trust | Commission after earned and documented |
| Paying personal bills from trust | Paying transaction expenses per contract |
Conversion
Conversion is using trust funds for personal benefit:
| Conversion Examples | Why Prohibited |
|---|---|
| Borrowing from trust account | Misappropriation of client funds |
| Using earnest money for operations | Theft of client property |
| Delaying disbursement for interest | Unauthorized use |
Record Keeping Requirements
Required Records
| Record | Purpose |
|---|---|
| Trust account ledger | All deposits and disbursements |
| Individual client ledgers | Track each client's funds |
| Bank statements | Monthly reconciliation |
| Deposit records | Proof of deposits |
| Disbursement records | Proof of payments |
Retention Period
| Record Type | Retention |
|---|---|
| Trust account records | 5 years |
| Transaction files | 5 years |
| Closing statements | 5 years |
Monthly Reconciliation
Brokers must reconcile trust accounts monthly:
| Step | Description |
|---|---|
| Bank statement | Obtain monthly statement |
| Compare records | Match to trust account ledger |
| Identify differences | Note any discrepancies |
| Resolve issues | Correct errors promptly |
| Document | Keep reconciliation records |
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Test Your Knowledge
Within how many banking days must a Kansas broker deposit earnest money into the trust account?
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Test Your Knowledge
How long must a Kansas broker retain trust account records?
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