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#459701 - 11/08/17 05:02 AM Broker Trust Account in New Jersey? Any banks or bankers to recommend?
markmallek Offline
Junior Member

Registered: 11/08/17
Posts: 1
Loc: NY
Hello,

I'm starting a brokerage in New Jersey but have run into a road block while trying to set up the escrow or broker's trust account at a bank. I'd prefer not to hold these funds, but understand it's a requirement for my NJ broker's license and I must show proof that I've opened either an escrow or brokers trust account.

I've been trying to work with commission approved banks, but no one seems to know how to set one of these things up. The issue with the account is that they keep asking for a beneficiary or an escrow agreement. My understanding is that this trust account would be set up, then I'd have the person I'm holding the money for fill out a w-9 and I'd have to create a sub account to put their money into similar to an attorney or landlord.

Does anyone have a recommendation of a bank in new jersey or better yet, a banker they've worked with who was able to set this type of account up?

Thank you in advance.

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#459702 - 11/08/17 05:17 AM Re: Broker Trust Account in New Jersey? Any banks or bankers to recommend? [Re: markmallek]
Vermont Offline
Major Contributor

Registered: 04/12/08
Posts: 7717
Loc: Vermont's North-East Kingdom
Here in Vermont, all Brokers maintain what's called an "IORTA" Account (Interest on Real Estate Trust Account) and any interest earned in that account is swept out monthly and sent to the State Treasurer to be used to support Affordable Housing Programs. Every Bank knows how to set these up.

I would assume New Jersey has something similar; just like Attorney Trust Accounts were set up to support Legal Defense Funds.

Your Real Estate Commission "should" be able to clear this up for you.
_________________________
Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"

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#459752 - 11/11/17 07:58 PM Re: Broker Trust Account in New Jersey? Any banks or bankers to recommend? [Re: markmallek]
Long Walk Offline
Member

Registered: 06/27/08
Posts: 117
Loc: New Hampshire
Originally Posted By: markmallek
I've been trying to work with commission approved banks, but no one seems to know how to set one of these things up. The issue with the account is that they keep asking for a beneficiary or an escrow agreement. My understanding is that this trust account would be set up, then I'd have the person I'm holding the money for fill out a w-9 and I'd have to create a sub account to put their money into similar to an attorney or landlord.

What is a commission approved bank?

You may want to talk with a local broker if you have relationships that would allow you to pick their brains. What you are experiencing sounds much harder than it should be because lawyers keep escrow accounts as well, so the banks should be well aware of the process.

We did this in SC when we owned a brokerage. Setting up the trust/escrow account was no more difficult than creating an operating account. We had the option to use a non-interest bearing account, which made my life much simpler. I have no experience with filling out W-9's as an agent, broker, or buyer. I have never heard of the practice, but it may be how things are done in NJ.

But, it is possible that I did the whole thing wrong, though. My escrow account was never inspected by the Commission in the 7 years that we did it. Everything balanced monthly and everybody got their money as was appropriate.

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