What a trust account is
When a manager collects rent for an owner, that money isn’t the manager’s. A trust account keeps it — and every tenant’s deposit — apart until it’s paid out on the owner’s statement or returned to the tenant. Regulators watch the balance closely: Arizona’s Department of Real Estate treats an overfunded account as an indication of commingling and an underfunded one as an indication of conversion.
The rules: Arizona as an example
| Topic | What the law says |
|---|---|
| Which accounts | All property management accounts are designated as trust accounts on the broker’s records (A.R.S. 32-2174) |
| Owners’ money | A trust account is required for all of the owner’s money, unless the owner directs it into the owner’s own account (32-2174) |
| Deposits | Undisputed money is deposited within three banking days (32-2174) |
| Reconciliation | Every month, a three-way reconciliation of the bank statements, client ledgers and trust account ledgers, with any variation explained (32-2151) |
| Commingling | Not allowed — except up to $5,000 of the broker’s own money to keep the account open or avoid minimum-balance charges (32-2151) |
Other states set similar rules; California’s Department of Real Estate puts it plainly: “Funds belonging to a licensee may not be commingled with trust funds.” Check your own state’s real-estate regulator.
Trust accounts and mid-term rentals
A midterm or medium-term rental moves more money through the account than a yearly lease: a new deposit in and an old one out every few months, prorated rent, cleaning fees and extensions. Nexxus keeps every rent payment, deposit and owner payout on one ledger, and each owner payout lists the ledger rows behind it — it doesn’t replace a trust account or your bank reconciliation. See mid-term rental software, or open the live demo set up for mid-term, no sign-up. Who needs a license to hold that money is covered in mid-term rental property management.
Related terms
- Security deposit — the tenant money a trust account holds. See security deposit.
- Owner statement — how the money leaves the account. See owner statement.
- Management fee — the part that becomes the manager’s. See management fee.
Trust account FAQ
What is commingling in property management?
Mixing money held for owners and tenants with the manager’s own money — paying a company bill from the trust account, or depositing rent into the operating account. Arizona’s statute bans it, with a narrow exception for up to $5,000 of the broker’s own money to keep the account open or avoid minimum-balance charges.
Does a landlord need a trust account?
Trust-account rules are written for licensed managers holding other people’s money. An owner renting their own home usually isn’t holding money for someone else — but many states have their own rules on where and how a landlord keeps security deposits, so check yours.
What is a three-way reconciliation?
A monthly check that three records agree: the trust account’s bank statement, the trust account’s own ledger, and the ledger for each owner and tenant. Arizona requires brokers to complete one every month and explain any difference.
Where does a property manager keep security deposits?
Usually in a trust account, apart from the manager’s own money, under the state’s rules. A management agreement should say how tenant deposits are handled — Arizona requires it to.
Sources
Read on the official sites on October 7, 2026. Laws change — check your state’s current rules.
- Arizona Revised Statutes 32-2174 (property management trust accounts) and 32-2151 (trust fund accounts)
- Arizona Department of Real Estate: Trust Compliance Quick Guide (December 2025)
- California Department of Real Estate: Trust Funds (RE 13)