Learn About Real Estate Trust

Some states require real estate brokers to establish interest-bearing real estate trust accounts for the deposit of all down payments, earnest money and other trust funds received by the broker and related to the conveyance of real estate. Banks and other depository institutions remit the interest from the accounts to the State dollars, partially fund grants to organizations that provide shelter or services to homeless individuals or families.

What is the Real Estate Trust Account? You sate collects fees from its licensees and maintains the money in the Real Estate Trust Account. The Trust Account is used to pay final judgments against persons who were licensed as real estate brokers or salespersons at the time the real estate transaction occurred. You must I hire an attorney to handle my claim but its not necessary. However, the Trust Account will pay reasonable attorney fees if a claim is paid. Most claimants employ an attorney to file the claim, obtain legal documents required for a payment, and represent the claimant if a court hearing is necessary. The consumer files a sworn application with the court after the judgment has become final, a writ of execution has been returned nulla bona , and an abstract of the judgment has been filed with the county clerk.

The majority of trust accounts do not incur standard bank service charges. If a bank assesses a service charge or makes a deduction from the account for printed deposit tickets or checks, returned check charges or overdraft charges, the South Dakota Real Estate Commission permits a broker to deposit a sum of his own money to cover such bank charges. An amount not to exceed $100.00 is allowed from the broker's personal funds to cover bank charges. An alternative to this would be to have all bank charges on the trust account automatically deducted from the business operating account.

All earnest money and other trust funds received are to be deposited timely, within the next legal banking day after acceptance of the contract. Deviations or failure to do so is a violation of South Dakota Real Estate License Law, and could result in disciplinary action against the licensee.

Trust account funds shall be retained in the trust account until the transaction is either consummated or terminated, at which time full accounting of the funds must be made. If an accepted offer and agreement to purchase does not close, the trust funds cannot be disbursed except pursuant to a written instruction of all parties to the transaction or pursuant to a court order. Real estate trust more information on following pages.

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