Iowa Trust Accounts and Client Money
Iowa brokers must safeguard client money in trust accounts and handle disputed deposits correctly. This chapter covers earnest-money deposits, disputed funds, and reconciliation.
Earnest Money and Separation of Funds
Client funds such as earnest money must be held in a trust account separate from the broker's business and personal funds. Commingling client money with the broker's own money is prohibited. The responsible broker maintains accurate records and must be able to account for all trust money at any time.
Disputed Deposits
When buyer and seller both claim an earnest-money deposit after a failed sale, the broker must keep the funds in trust and not release them arbitrarily. The broker follows the law and rules for disbursing disputed deposits, which may include obtaining written mutual agreement or depositing the funds with a court through interpleader. The broker may not keep or unilaterally split the money.
Reconciliation and Recordkeeping
The broker reconciles the trust account regularly, comparing the bank balance to the total of individual client ledgers to confirm the account holds exactly what is owed and to catch errors or shortages. Per-client ledgers are required. This oversight is a core broker responsibility and a frequent audit focus.