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Understanding Trust Monies

Instead, they are legally required to be held in a trust account a protected financial account governed by strict state regulations.

Audience: renters, rental owners, and applicants who want to understand how trust funds are handled, why they are regulated, and how MoveZen manages them in compliance with North Carolina real estate law.

When you pay rent, a security deposit, application fees, or other housing-related funds, those payments don’t immediately become the property manager’s money. 

Understanding trust monies helps you feel confident that your funds are being handled transparently, securely, and according to North Carolina real estate law.

FAQs ❓

What are trust monies?
Funds belonging to someone else typically a tenant or rental owner that a property manager holds temporarily.

Why can’t the property manager use trust funds like normal money?
Because trust funds are legally protected and must be held separately for the benefit of the tenant or owner.

Where are trust funds kept?
In an approved, insured trust (escrow) account at a bank.

Do trust monies earn interest?
Not usually, unless your lease or state law specifies otherwise.

Who regulates trust accounts in North Carolina?
The NC Real Estate Commission (NCREC).

What happens if trust money is misused?
Severe penalties, including fines, license suspension, or revocation.

What Counts as “Trust Monies”? ✔️

Trust monies include any funds the property manager holds that don’t belong to them. Examples:

  • 💵 Security deposits

  • 💵 Rent payments before being transferred to the property owner

  • 💵 Pet deposits (if applicable)

  • 💵 Prepaid rent (like last month’s rent)

  • 💵 Owner reserves

  • 💵 HOA reimbursements

  • 💵 Application fees (in some states)

  • 💵 Maintenance reimbursements

  • 💵 Move-in or move-out fees before they are disbursed

Each of these must be accounted for and protected.

Why Trust Accounts Exist 🧠

Trust accounts protect both tenants and owners.

1. They Prevent Misuse of Other People’s Money

Property managers cannot:

  • Spend trust money on business expenses

  • Delay depositing funds

  • Mix trust money with operating funds

This keeps all transactions transparent and auditable.

2. They Create a Clear Paper Trail 🧾

Every dollar:

  • Can be traced

  • Must be assigned to a specific tenant or owner

  • Must match the ledger

  • Must remain available for withdrawal or refund

This is crucial during audits by the NCREC.

3. They Ensure Legal Compliance ⚖️

North Carolina requires:

  • Trust funds to be deposited within three banking days

  • Accurate, itemized records

  • Monthly reconciliations

  • Separation from business accounts

Violations are taken extremely seriously.

How Trust Monies Flow Through a Rental Account ✔️

Here’s the lifecycle of trust money in a typical rental scenario:

1. Tenant Pays Rent → Money Goes Into Trust

The funds remain in the trust account until:

  • Ledger entries are created

  • Management fees and expenses are calculated

  • Owner distributions are scheduled

2. Property Manager Reconciles Accounts

Each month, the trust account must be reconciled:

  • Bank balance

  • Ledger balance

  • Owner/tenant sub-ledgers

All three must match.

3. Disbursements Are Made to Owners

Once reconciled, funds are:

  • Released to the rental owner

  • Used to pay vendor invoices

  • Applied to maintenance charges

  • Held for future expenses (owner reserves)

4. Security Deposits Stay Put 🔐

These remain untouched until:

  • The tenant moves out

  • Deductions are itemized

  • The balance is refunded

They must stay in trust the entire time.

Why Some Ledger Entries Are Delayed or Scheduled 🔄

Because trust accounting is heavily regulated, certain transactions happen on a schedule not instantly.

Examples:

  • Rent may show “scheduled” until reconciliation

  • Owner payments go out only after reconciliation

  • Deposits may take several days to clear into trust accounts

  • Vendor payments wait until funds are verified in trust

This ensures absolute accuracy and compliance.

Important Things Residents Should Know ✔️

✔ Your rent does not go to MoveZen it goes into a legally regulated trust account

✔ Your security deposit stays protected until move-out

✔ Refunds can only come from trust accounts, not operating accounts

✔ Returned payments must be corrected before trust money can be disbursed

✔ All trust funds are audited and traceable

Trust accounting exists to protect you.

Important Things Owners Should Know ✔️

✔ Your income is paid only from verified trust funds

✔ Monthly reconciliation ensures accuracy

✔ Management fees are deducted only after funds are in trust

✔ You can view all trust-money activity in your owner portal

✔ Your tenant’s deposit is legally restricted until move-out

Well-managed trust accounting ensures healthy, transparent property management.