Trust Accounts and Well Disclosure in Minnesota
Minnesota brokers must safeguard client money in trust accounts and ensure state-specific transfer disclosures are completed. This chapter covers trust handling, disputed deposits, and the Well Disclosure Statement.
Trust Accounts and Earnest Money
Earnest money and other client funds must be handled through the broker's trust account. A salesperson who receives funds must deliver them promptly to the primary broker, and the broker must keep trust money separate from business and personal accounts. Commingling or converting trust funds is one of the most serious violations of Minnesota license law.
Disputed Deposits
When a buyer and seller dispute who is entitled to earnest money held in trust, the broker must retain the funds and may not unilaterally decide who receives them. Disbursement should occur only on the parties' written agreement or as directed through an authorized legal process such as a court order or interpleader. Unilateral release or conversion exposes the broker to discipline and liability.
Well Disclosure
When a property being sold has a water well, Minnesota requires the seller to provide a Well Disclosure Statement identifying the location and status of each well, and sealed wells must be documented. This disclosure ties into Minnesota's recording process and protects buyers and groundwater. The broker should confirm the well disclosure is completed so the transfer can be recorded without delay.