Trust Account Violations: TREC Defense for Frisco Brokers
Trust account violations are the single most aggressive enforcement priority for the Texas Real Estate Commission. Frisco-area brokers handling escrow funds — earnest money, due diligence deposits, security deposits — are subject to strict accounting, deposit-timing, and segregation requirements. A trust account violation can convert a routine TREC matter into license revocation.
TREC Trust Account Rules
Texas Occupations Code §1101.652 and TREC rules require: separate trust accounts for client funds, deposit within reasonable time (typically same business day or next), no commingling of personal funds, complete and current accounting, and authorized disbursements only. Violations are typically auditable from bank records.
Common Frisco Broker Violations
Common: late deposit of earnest money checks (held in desk drawer), commingling (broker funds in trust account or trust funds in operating account), missing reconciliations, unauthorized disbursements, accounting errors propagating across multiple transactions, and insufficient documentation supporting disbursements. TREC audits typically discover several violations once initiated.
Defending TREC Trust Account Audits
Audit defense begins with reconciliation accuracy. Frisco brokers should immediately engage forensic accountant or experienced bookkeeper to reconstruct trust account activity. Defense strategy: document the violation as accounting/clerical (not theft), demonstrate immediate remediation, and produce evidence of subsequent compliance training.
Criminal Exposure
Trust account theft (knowing misappropriation of client funds) is criminal under §31.03 and is a felony. License-defense and criminal-defense must coordinate when the alleged violation involves intentional fund use rather than clerical error. Reggie London's former-prosecutor experience in Dallas County District Attorney's Office covers theft prosecution evidence and defense from both sides.
Frequently Asked Questions
TREC interprets "reasonable time" as typically same business day or next, depending on circumstances. Holds beyond 2-3 business days raise audit issues.
No. Trust accounts must contain only client funds. Broker-owned funds in trust account is commingling.
Yes. TREC rules require monthly reconciliation maintained current and available for inspection.
Sometimes. If broker disbursed funds before clearance and trust account went negative, yes. If the bounce was on a deposit and broker properly handled it, generally no.
Possibly. Patterns are most common, but a single major error (large unauthorized disbursement, knowing commingling) can produce revocation.
Need defense for a license matter in Frisco or DFW?
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