Trust Account
Synonyms: Client Trust Account، Owner Trust Account، Client Funds Account
Last updated: 2026-05-07
Short Definition
Special bank account where real estate office holds owners' and tenants' funds, separating office funds from clients, to protect money.
Overview
Legal Basis
Trust account is based on the Real Estate Brokerage Law issued by Royal Decree No. (M/41) of 1443 AH and its executive regulations, which require separating client funds from office funds. It is also subject to SAMA regulations governing banking trust accounts, and SOCPA-adopted accounting standards. REGA requires offices to provide periodic disclosures and annual accounting audit of accounts. Violating trust account rules exposes the office to penalties reaching suspension or cancellation of Fal license, in addition to civil and criminal liability.
Practical Example
Distinguished Property Management office in Riyadh manages 50 properties for 20 different owners. It has two bank accounts: trust account (for receiving owner rents) and operating account (for office revenues from commissions). In a specific month: rents totaling SAR 720,000 are collected from all tenants, enter the trust account. Commissions are calculated (8% × 720,000 = SAR 57,600) and service fees with electronic tax invoices (SAR 28,400), transferred from trust account to operating account. Agreed maintenance expenses (SAR 24,000) are transferred to service providers directly. The remainder (SAR 610,000) is distributed to the 20 owners according to each one's share before month end. Every movement in the trust account is documented with official receipt. Each owner receives detailed monthly report showing their income, deductions, and net transferred. Transparency is complete, and the office works with full credibility per REGA controls.
Common Mistakes
- ✗Mixing client funds with office funds in one account — serious violation that may permanently cancel Fal license.
- ✗Using trust account funds for office operating expenses — described as fraud in Saudi law.
- ✗Delaying transfer of dues to owners after commission deduction — exposes office to complaints and penalties.
- ✗Failing to provide accurate monthly reports to owners — loses trust and is considered violation of license conditions.
- ✗Not full documentation of every deduction from trust account — every movement requires invoice or official receipt.
International Differences
Trust account system is a global standard in professional property management. In the UAE, Trust Account is mandatory per Mollak, with regular audit. In Turkey, Güven Hesabı is less regulated and relies on client trust. In Egypt, the system is slowly developing. In the UK, Client Money Protection (CMP) is legally mandatory since 2019, with insurance mechanism on client funds. In the US, Trust Accounts are mandatory in every state with strict audit from Real Estate Commissions. The Saudi advantage in trust account is clear mandatoriness in the Brokerage Law, integration with REGA for oversight, electronic transparency with owners (detailed periodic reports), and strict penalties for violators, transforming the sector to a modern professional model within few years of regulation application.