Key Takeaways
- Oklahoma brokers must maintain trust/escrow accounts only if they hold funds belonging to others
- Trust accounts must be in federally insured financial institutions with deposits insured by a federal agency
- All escrow funds must be deposited by the end of the third banking day following acceptance
- Commingling broker funds with client funds is prohibited
- Trust account records must be maintained for 5 years after contract completion
Oklahoma Trust Account Requirements
Oklahoma brokers must maintain trust accounts to hold client funds separate from their operating funds when handling money belonging to others.
Trust Account Basics
What is a Trust/Escrow 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 |
| Other client funds | Closing proceeds pending disbursement |
When Required
A trust account is not mandatory unless funds belonging to others are accepted:
Key Rule: A broker shall not be required to maintain a trust or escrow account unless monies or other depositable items belonging to others are accepted by the broker.
Account Requirements
| Requirement | Oklahoma Rule |
|---|---|
| Account type | Trust or escrow account |
| Financial institution | Federally insured (FDIC or NCUA) |
| Account name | Broker or brokerage name as on license |
| Account designation | Must be styled as "trust" or "escrow" account |
| Signatory | Broker must be a signor on the account |
Security Deposits
Special requirements apply to security deposits:
- Must be kept in an escrow account maintained in Oklahoma
- Account must be with a federally insured financial institution
- Separate from operating funds
Deposit Requirements
Timeline
| Situation | Deposit Deadline |
|---|---|
| Earnest money | End of third banking day following acceptance |
| Other funds | Unless otherwise agreed in writing by all parties |
Registration with OREC
Brokers must notify OREC in writing of all:
- Trust or escrow accounts
- Security deposit accounts
- Rental management operating accounts
- Interest-bearing accounts with trust funds
Important: OREC must be notified each time an account is opened, closed, or changed using the form provided by the Commission.
Interest-Bearing Accounts
Oklahoma allows brokers to place escrow funds in interest-bearing accounts:
Requirements for Interest-Bearing Accounts
| Requirement | Details |
|---|---|
| Disclosure | Must disclose in writing to all parties |
| Interest recipient | Must identify who receives the interest |
| Account type | Must be a demand-type account |
| Prohibited types | Cannot use CDs or time deposits |
Note: OREC does not prohibit the broker from receiving the earned interest, but it must be disclosed.
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 |
| Interest earned (if disclosed) | Using client funds for business expenses |
| Funds of others in escrow | Broker's personal funds in trust account |
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
Fund Maintenance
Brokers must ensure funds are maintained in the trust account until:
- Transaction is consummated (closed)
- Transaction is terminated
- Proper accounting is made
Record Keeping
Required Records
Brokers must maintain:
| Record | Description |
|---|---|
| Bank statements | Monthly statements from financial institution |
| Deposit receipts | Documentation of each deposit |
| Disbursement records | Documentation of each disbursement |
| Client ledgers | Individual records for each client/transaction |
| Accurate detailed records | All transaction documentation |
Retention Period
| Requirement | Duration |
|---|---|
| Trust account records | 5 years after contract completion |
| Transaction files | 5 years after contract completion |
Key Point: Oklahoma requires 5 years of record retention, which is longer than some other states.
OREC Audits
OREC has authority to:
- Audit trust accounts as part of investigations
- Review records during complaint 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 |
| Failure to register account | Administrative violation |
Who is authorized to maintain a trust account for client funds in Oklahoma?
How long must Oklahoma brokers maintain trust account records?
By when must earnest money be deposited in Oklahoma?