Establishing & Maintaining the Trust Account
Tell your owner/client clearly about your trust account requirements and how your state law regulates the management of those funds. NEVER cover their expenses and send them an invoice or you’ll be bankrolling them forever. Make it clear they need to pre-fund maintenance, maintain a minimum account balance (owner reserve) and keep all trust accounts positive. Let them know you will be depositing all funds you receive into a trust account and report to them monthly. This disclosure takes care of all those issues and gives you a document to point back to when they resist depositing money with you before you pull the trigger on normal maintenance and turnkey projects. This is often hard to manage because owners want to stay in control. They want to pay off an invoice, after the job is done, and they verify it. After the job is done is never the time to argue about money. Set this up right and you’ll have no trouble with the administration of your owner’s trust account. Make it clear that you intend to follow the licensing and trust account laws of your state and they need to embrace and cooperate with that effort or find another manager. You are no different than a bank, brokerage house or sales company. You must follow the rules of your licensing bureau and ‘having the money in the owners trust account BEFORE you order the work’ is part of that compliance issue.