Trust Accounts and Escrow in Louisiana
Handling client money correctly is one of the most broker-distinctive duties in Louisiana. This chapter covers the sales escrow/trust account, the prohibition on commingling, and how to handle disputed deposits.
The Sales Escrow/Trust Account
A Louisiana broker must deposit client and customer money, such as deposits and earnest money, into a designated sales escrow (trust) account kept separate from the broker's business and personal funds. Commingling trust money with operating funds, or converting it to the broker's own use, is a serious violation of Louisiana license law. The broker, not an affiliated salesperson, is accountable for proper trust-account handling.
Delivering Deposits
A salesperson who receives a deposit has no authority to hold it and must deliver it promptly to the sponsoring broker for deposit into the trust account. This preserves the broker's supervisory responsibility and prevents unauthorized handling of client funds. Delays or mishandling of deposits are frequent bases for LREC discipline.
Disputed Deposits
When a buyer and seller dispute who is entitled to escrowed money, the broker must retain the funds in the trust account and may not unilaterally decide who gets them. The broker disburses only on the parties' written agreement or as directed through an authorized legal process, such as a court order or interpleader. Releasing or converting disputed funds without authority exposes the broker to discipline and civil liability.