What are trust funds in the context of real estate?

Trust funds in real estate refer specifically to money that belongs to others and is held for a specific purpose, often in the context of real estate transactions. This can include earnest money deposits made by buyers to show their commitment to purchasing a property, property management funds held for maintenance and other expenses, or security deposits from tenants.

The handling of trust funds is governed by strict legal and ethical standards to ensure that the funds are safeguarded and only used for the intended purposes. This practice helps build trust between clients and real estate professionals, as clients can be assured that their money is being managed responsibly and transparently.

In contrast, personal assets of brokers, bank loans secured for clients, or funds kept for brokers' own investments do not align with the definition of trust funds, as these do not pertain to holding clients' money for specified uses in real estate transactions.