Not every dollar that flows through an agency belongs in the statutory trust account, and not every dollar that lands in the trust account belongs there forever. Getting the classification wrong is the first step toward a breach — this lesson sets out what must sit in trust and what never should.
The default rule
The starting principle is simple: any money you hold on behalf of someone else, in the course of real estate business, that has not yet been earned by you or paid to the person it belongs to, is trust money. Sales deposits, rental payments collected on behalf of a landlord, residential tenancy bond monies (in states where the agency, rather than a government bond authority, holds them), holding deposits, retentions withheld pending a special condition, and marketing fee pre-payments a vendor has paid in advance all fit this description.
The test is ownership, not intention. It does not matter that you are confident the deposit will become your commission once the deal settles, or that the vendor has verbally agreed you can draw down the marketing money as you spend it. Until the money is legally yours — because the transaction has completed, the disbursement has been authorised in writing, or the fee has actually been earned under the agency agreement — it is client money and it goes into trust.