Kansas Trust Accounts and Client Money
Kansas brokers must safeguard client money in trust or escrow accounts. This chapter covers earnest-money deposits, the ban on commingling, and permitted broker funds.
Earnest Money and Deposit Timing
Client money such as earnest money must be deposited into a trust or escrow account separate from the broker's business and personal funds within the time frame set by KREC rules. The broker maintains accurate records and must be able to account for all trust money.
Commingling and Conversion
Mixing client trust deposits with the broker's operating money is commingling, and using trust funds for firm expenses is conversion. Both are serious violations for which the supervising broker—accountable for the trust account—may be disciplined by KREC. Failing to reconcile the account compounds the problem.
Permitted Broker Funds
To keep the account open without commingling, Kansas rules generally allow a broker to hold only a small amount of the broker's own funds in the trust account for purposes such as covering bank service charges or a required minimum balance. Trust money may not be used to pay commissions, advertising, or other firm expenses.