The California Department of Real Estate (DRE) has addressed frequent questions regarding who can serve as signatories on trust fund accounts managed by real estate brokers. The department clarified that, while the short answer is “No” to whether anyone can be a signatory, the issue is more complex and depends on specific legal guidelines.
According to DRE, funds deposited by a broker in a trust fund account must remain there until disbursed by the broker according to instructions from the person entitled to those funds. For individual brokers, only that broker may sign for withdrawals. In cases involving corporate brokers, an officer—specifically the designated officer through whom the corporation is licensed—must be the signatory.
Other individuals may be authorized in writing by either the individual broker or designated officer to make withdrawals. However, property owners are generally not included among those eligible to be signatories under these rules.
The DRE emphasized that even if additional signatories are added to a trust fund account, this does not absolve brokers of their responsibility or liability for handling trust funds. Brokers have a fiduciary duty to manage and account for these funds in compliance with state regulations and must maintain full control over them.
Whether a property owner can be a co-signatory depends on the services performed by the broker. If a broker’s work requires a real estate license and involves access to trust funds belonging to others, they must comply with Business & Professions Code section 10145 and related record-keeping requirements. Allowing both a real estate broker and property owner as co-signatories on a general account does not meet these legal provisions.
The DRE advises brokers to proactively follow trust fund record-keeping rules, including signature requirements, in order to protect both their business interests and the public.
