That's what I thought, and that's why the bank wanted an 'agreement' with whomever I was holding the funds for. Don't they 'get' RE Trust accounts?

Apparently your bank doesn't "get it". If they are looking for a specific agreement for each and every buyer that tenders earnest money with you. I have a single escrow account for the RE business but it contains deposits from multiple buyers at any given point in time. The deposits come in as contracts are written and are dispersed as the contracts are closed (or occasionally terminated per a Cancellation and Release that specifies the agreed escrow dispersment). It would be a nightmare to have seperate agreement, or worse yet seperate account, for each EM deposit.

The bank I have mine at is relatively small, I think they have about 8 office locations. I was told by one of their VP's, a personal friend, that I was only the 2nd such account they have ever had; but at least it is done right!

I have buyers make out checks to my title company to hold them in escrow. There are benefits and negatives about this. I just don't want another bank account and more records to keep.

The benefit is you don't have to worry about comingling. Here in Colorado when I read the commission's newsletter and it lists about the brokers that have gotten into trouble in the last month alot of them are for comingling earnest money and other funds. A surprising amount.

But the negative is it's more difficult to get an earnest money check back from the title company as addressed in Pike Peak's post above.

Yes, if the broker holds earnest money it should be in a separate account and not co-mingled with the operating funds. In my case the operating account and escrow account are actually at different banks, further reducing the chance that the wrong account is being used for a deposit or withdrawal.

So what can we conclude from this? (at least in California)

If a broker does not accept trust funds, is a trust fund account still required by the DRE? Can a broker avoid any trust fund requirements by simply never touching any money and requiring checks to be given directly to the title company?

In GA if a title company holds the earnest money or an attorney the principal broker DOES NOT have to have a trust account with a bank because we are not holding the funds.The attorney or title company is put into the line in our contracts of who is holding the earnest money and the buyer makes the check out to them.Sometimes the title company or attorney want to thebuyer to sign an additional rider outlining how they will handle em disputes and make the buyer sign it and if the buyer disagrees they WILL NOT hold the earnest money.It's different for each state and your state real estate commission should be able to give you the answer and a copy of the code that applies to your state.

avoid having a trust account unless you do property management, period. You are only asking for fines

So if a buyer writes earnest money deposit directly to escrow, does the brokerage have to log it in a columnar trust log?

That procedure should be "clearly" defined in your State's Real Estate Rules and Regulations. Here, almost 40% of the disciplinary actions involve mis-management (and co-mingling) of Escrowed Funds.

In California, yes. If the check is written (and funds are handed over) directly to escrow, the columnar record must indicate the date the funds were received, the form of the funds, the amount received, a description of the property, the identity of the person to whom the funds were forwarded, and the date of disposition.

I called into the C.A.R Legal hotline. The attorney who answered said as long as the brokerage does not touch the deposit and the buyer sends EMD directly to escrow, there is no duty for the brokerage to log it in the columnar trust form.

If it is *wired* directly from the buyer to escrow, you are correct. I always recommend the RPA form specify that the buyer will wire their earnest deposit into escrow for that reason.

If, as you stated, a buyer "writes"--i.e., a paper check is involved--a check directly to escrow, and you so much as touch it, then my understanding is that Regulation 2831 still requires you to record it as funds received but not deposited unless the amount is less than $1000.