So You Don't Want to Have a Trust Account?

 Tracy Rucka  |    February 04, 2016

The decision whether to have a real estate trust account or not begs the question of whether a broker is required to have a real estate trust account. The answer is a qualified “no”. The first rule about trust accounts: when you receive real estate trust funds, you are required to open a trust account.

Wis. Admin. Code § REEB 18.033(1) provides: “Opening an account. A broker shall open a real estate trust account if the broker receives real estate trust funds.”

Although it may sound simple — “don’t open a trust account and do not receive real estate trust funds” — what that looks like for listing brokers or cooperating brokers in practice is a bit more complex. Given the WB offers include standard language for the earnest money to be paid to and held in the listing broker’s trust account, a broker who chooses not to have a trust account needs to be intentional to inform all parties and any cooperating brokers the broker does not have a trust account. In addition, the listing broker will need to assure steps are taken so he never receives any trust funds. 

When working on the Legal Hotline, I have heard brokers say they don’t want to open a trust account or want to close an existing account to limit liability. However, not having a trust account brings with it additional obligations to clients and customers as well as cooperating brokers. The duties you owe to all parties in a transaction include the duty to safeguard trust funds and other property the broker holds. If you do not receive or hold trust funds, you will not need to open a trust account, however, you will need to assure no one provides estate trust funds. 


The education process will begin upon entering into a listing agreement with the seller. If the listing broker elects not to have a trust account, the seller will need to be informed. The seller will need to negotiate his or her offer to have earnest money held elsewhere. The listing broker should indicate to the seller that the seller may incur additional costs or expenses for an escrow agreement or a third party holding earnest money. 


It would be prudent for the listing broker to alert other brokers there is no trust account. Cooperating brokers may direct the buyer to may modify the offer. Although the REEB-approved offers to purchase outline a procedure for the holding of earnest money by either the listing broker, the selling broker or the seller, this is not law and may be modified in the offer. As long as the parties agree, the earnest money may be held in the title company's trust account, an attorney’s account or an account opened by the parties themselves for that purpose. 

Where will the money go? 

The parties may have their funds held by a third party. For example, a title company can act as an escrow agent, for a fee, or a bank can hold the party's funds in a joint account for the buyer and seller. The offer to purchase should reflect the full agreement of the parties, including whether the parties intend to hold money in escrow. In such a case, it may be necessary to delete or line-out lines 370-372 of the WB-11 Residential Offer to Purchase, which indicate the money is held by a broker or the seller. These lines specifically provide, “Unless otherwise agreed, earnest money shall be paid to and held in the trust account of the listing broker (Buyer's agent if Property is not listed or Seller's account if no broker is involved), until applied to the purchase price or otherwise disbursed as provided in the Offer.” 

Likewise changes will need to be made to lines 10-12 as the offer presumes the earnest money will be mailed, or commercially or personally delivered to the listing broker. These lines do allow the parties to name a different third party. It would be prudent to cross out “listing broker” on line 11 to assure the funds are properly routed. Alternately the broker may draft an addendum to the offer to reflect the agreement of the parties to hold money in escrow with a title company or other third party.

Escrow agreements

If an attorney or title company will be holding the funds, the parties may negotiate for the responsibility to draft and pay fees. A well-written escrow agreement will minimize disputes regarding a post-closing escrow.
Real estate licensees are not presently authorized to draft escrow agreements per Wis. Admin. Code § REEB 18.06. That rule provides: “If the parties to a transaction do not desire that the broker hold the earnest money in the broker's real estate trust account, and wish to designate an escrow agent other than the broker, the broker may not draft the escrow agreement. The escrow agreement shall be drafted by the parties or an attorney. The broker may not hold the funds in the broker's real estate trust account, nor may the broker act in any way as custodian of the funds for the parties. The funds, pursuant to the escrow agreement, shall be held by a party other than the broker, such as: a bank, a savings and loan association, a credit union, or an attorney.”

The buyer and the seller should contact their attorneys for assistance in drafting the escrow agreement. The attorneys can include disbursement instructions in the escrow agreement for the buyer and seller, which may or may not mirror the provisions in the offer. Like an offer to purchase, an escrow agreement can create a legally binding contract that can be enforced by the parties. For more information about escrow agreements, see the October 2000 Legal Update, “Trust Account Basics,” at

Opening a trust account 

If the offer is not modified and the listing broker receives real estate trust funds, the broker will be required to open a real estate trust account. A broker may not unilaterally misdirect the funds. A broker shall name the broker’s real estate trust account with the name appearing on the broker’s license or with a trade name submitted to the department under Wis. Admin. Code § REEB 23.03 and shall include the words “trust account” in the name of the account, per § REEB 18.034(1).

The name must also be imprinted on the real estate trust account checks per § REEB 18.034(2). The broker must provide a completed Consent to Examine and Audit Trust Account, Form #814, no later than 10 days after opening any real estate trust account. The full text of Wis. Admin. Code chapter REEB 18 is available at, and the form is available online at

Closing an existing trust account 

If a broker currently has a trust account and is thinking about closing it, the trust account must be kept open until there are no trust funds remaining. At that point, if up to $300 of the broker's personal funds remain in the account, the broker may withdraw the $300, and the account may be closed. Wis. Admin. Code § REEB 18.035(2) provides that when a trust account is closed, the broker should notify the DSPS by letter — there is no specific form. Be sure to include the trust account name and number. The letter may be addressed to the Department of Safety and Professional Services, Division of Professional Credential Processing, 1400 E. Washington Ave., P.O. Box 8935, Madison, WI, 53708. 

More information about trust account requirements is available in the General Real Estate Trust Account Requirements in Wisconsin, Form #2257, at

Tracy Rucka is Director of Professional Standards and Practices for the WRA.

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