The California Department of Real Estate (DRE) has addressed frequent questions regarding who is permitted to sign on trust fund accounts. The agency clarified that while property owners are generally not allowed as signatories, there are specific guidelines for brokers and corporate entities.
According to the DRE, “all funds deposited by the broker in a trust fund account shall be maintained there until disbursed by the broker in accordance with instructions from the person entitled to the funds.” For individual brokers, only their signature can authorize withdrawals from a trust account. In corporate situations, an officer—specifically the designated officer through whom the corporation is licensed—must serve as signatory.
Alternatively, others may be authorized to make withdrawals if they have written authorization from either the individual broker or designated officer. However, property owners typically do not fall within these guidelines.
The DRE emphasized that any arrangements made by real estate brokers to add additional signatories do not absolve them of responsibility or liability regarding how trust funds are handled. Brokers maintain a fiduciary duty once they receive trust funds and must remain in full control of those assets.
Regarding whether both a real estate broker and property owner can be signatories on a general account, the DRE stated: “Having both the real estate broker and the property owner as signatories on the same general account does not meet the provisions of B&P Code section 10145, as noted above.”
The department encourages brokers to comply proactively with all trust fund record keeping requirements and signature rules to ensure business success and public protection.
