Key Takeaways
- Nevada brokers must maintain separate trust accounts for real estate transactions and property management
- Property management requires TWO separate trust accounts: one for rental operations and one for security deposits
- Trust accounts must be reconciled monthly within 30 days of receiving the bank statement
- Annual trust account reconciliation must be submitted to NRED by the license expiration date
- Commingling broker funds with client funds is strictly prohibited
Nevada Trust Account Requirements
Nevada brokers must maintain trust accounts to hold client funds separate from their operating funds under NRS 645.310 and NAC 645.655.
Trust Account Basics
What is a Trust Account?
A trust account (also called an escrow account) is a bank account where brokers hold funds belonging to others:
| Fund Type | Examples |
|---|---|
| Earnest money deposits | Buyer's good faith deposit |
| Security deposits | Tenant deposits on rentals |
| Rent collections | Collected on behalf of landlords |
| Advance fees | Prepaid fees for services |
| Other client funds | Closing proceeds pending disbursement |
Account Requirements
Trust accounts must:
| Requirement | Details |
|---|---|
| Allow withdrawals | Without prior notice or penalties |
| Require licensee signature | No withdrawals without licensee signature |
| Be clearly labeled | As trust or escrow account |
| Be federally insured | FDIC or NCUA insured |
Key Rule: Client funds MUST ALWAYS be kept separate from company funds.
Property Management Trust Accounts
Property managers have enhanced requirements:
Two Separate Accounts Required
| Account | Purpose |
|---|---|
| Rental operations account | Rent collections, operating expenses |
| Security deposit account | Security deposits ONLY |
Additional Requirements
| Requirement | Details |
|---|---|
| Separate ledgers | Individual ledger for each property managed |
| Regardless of ownership | Separate ledger even if client owns multiple properties |
| Clear identification | Each unit must be separately tracked |
Important: The security deposit account must be used SOLELY for security deposits - never for operating expenses.
Reconciliation Requirements
Monthly Reconciliation
| Requirement | Details |
|---|---|
| Frequency | Monthly |
| Deadline | Within 30 days of bank statement |
| Who performs | Broker or broker's designee |
| Broker review | Broker must sign reconciliation form |
Deficit Accounts
A broker who permits a trust account to fall into deficit:
| Situation | Consequence |
|---|---|
| Deficit for 45+ consecutive days | Subject to discipline |
| Any deficit | Serious violation |
| Repeated deficits | License suspension/revocation |
Annual Reporting to NRED
Required Annual Accounting
| Requirement | Details |
|---|---|
| Form | NRED-provided reconciliation form |
| Due date | License expiration date |
| Period covered | Calendar month before expiration month |
| Submission | To the Real Estate Division |
Example: If your license expires in June, you must submit a reconciliation for May by your June expiration date.
Prohibited Practices
Commingling
Commingling is mixing client funds with broker's personal or business funds. It is strictly prohibited.
| Allowed | NOT Allowed |
|---|---|
| Client funds in trust account | Client funds in operating account |
| Small broker deposit to maintain account | Large broker funds in trust account |
| Interest earned (per agreement) | Using client funds for business expenses |
Conversion
Conversion is using client funds for unauthorized purposes. It is a serious violation that can result in:
- License revocation
- Criminal charges
- Civil liability
- Payment from Recovery Fund
Record Keeping
Required Records
| Record | Description |
|---|---|
| Bank statements | Monthly statements |
| Deposit receipts | Documentation of each deposit |
| Disbursement records | Documentation of each payment |
| Client ledgers | Individual records for each client |
| Reconciliation forms | Monthly reconciliations |
Retention Period
| Requirement | Duration |
|---|---|
| Trust account records | 5 years minimum |
| Transaction files | 5 years minimum |
Location of Records
| Requirement | Details |
|---|---|
| Notice to NRED | Must notify Division of exact location |
| Before moving | Must notify before relocating records |
| Access | Must be available for inspection |
NRED Audits
NRED has authority to:
- Audit trust accounts at any time during business hours
- Review all records during investigations
- Take disciplinary action for violations
Common Audit Findings
| Issue | Consequence |
|---|---|
| Shortage of funds | Serious violation - potential revocation |
| Poor record keeping | Warning to suspension |
| Late deposits | Warning to fine |
| Commingling | Fine to revocation |
| Missing reconciliations | Fine to suspension |
How many separate trust accounts must a Nevada property manager maintain?
Within how many days must a Nevada broker reconcile their trust account after receiving the bank statement?
How long can a Nevada trust account remain in deficit before the broker is subject to discipline?