Trust account (property management)
A trust account in property management is a dedicated bank account that holds money belonging to others, owners and tenants, separate from the management company’s operating funds. Rent, security deposits, and reserves are commonly held in trust.
Why trust accounting matters
- It keeps client money separate from company money, a requirement in many jurisdictions.
- It supports clean reconciliation, so each owner and property can be accounted for at any time.
- It reduces commingling risk, which is a common source of compliance problems.
Trust accounting rules vary by state and license type. This is general information, not legal or compliance advice. Confirm your obligations with your regulator or counsel.
What is commingling?
Commingling is mixing client funds (owner or tenant money) with the management company’s own funds. It is generally prohibited and is what trust accounts are designed to prevent.
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