Escrow / Trust Account
A separate account where money belonging to others is held apart from a broker's own funds, often at the title company in a Texas sale.
An escrow or trust account holds money that belongs to others, such as a buyer's earnest money, separate from a broker's personal and business funds. In most Texas residential transactions, the earnest money is held by a neutral escrow agent named in the contract, commonly a title company, rather than by the broker.
When a Texas broker does hold money for others, the broker must keep it in a trust account and disburse it only as authorized. Mixing trust money with the broker's own funds is commingling, and using trust money for the broker's benefit is conversion.
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- Commingling
Mixing money held in trust for others with a broker's personal or business funds, which is a TRELA violation.
- Conversion
Using money held in trust for others for the broker's own benefit, a serious TRELA violation that can carry criminal penalties.
- Earnest Money
A good-faith deposit a buyer puts down to show serious intent, held in escrow and applied at closing.
This definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.