California Trust-Fund Handling (Regs 2830-2835)
Trust-fund handling is the most broker-distinctive competency in California, governed by Commissioner's Regulations 2830-2835. This chapter covers deposit timing, the commingling prohibition, and monthly reconciliation.
Deposit Timing
A broker who accepts trust funds on behalf of another must place them into a neutral escrow depository, into the hands of the broker's principal, or into a trust account not later than three business days after receipt, unless the buyer's written instructions direct that a deposit be held uncashed until acceptance. Prompt handling protects client money.
The Commingling Prohibition
Commingling client trust funds with the broker's own money is prohibited. California allows only a narrow exception: the broker may keep up to $200 of the broker's own funds in the trust account to cover bank service charges. Depositing trust funds into personal accounts, using one beneficiary's money for another, or paying business expenses from trust funds are prohibited.
Records and Reconciliation
The broker must maintain a control record of all trust funds and separate records for each beneficiary and reconcile them at least monthly. Monthly reconciliation catches shortages and errors early. Failure to keep trust records or reconcile is a frequent basis for DRE discipline.