Where the money has to sit
Rule 790-X-3-.03 has three separate requirements bundled into one sentence, and each one matters on its own. The account must be separate from the broker's own operating money — no commingling. It must be federally insured. And it must be held at a financial institution physically located in Alabama.
An operating account is for the brokerage's own business: payroll, commissions, rent, insurance, taxes, travel. It is not a place for a buyer's earnest money to spend a weekend.
- Separate from company funds — never commingled
- Federally insured
- At a financial institution located in Alabama
- Qualifying broker is a signatory with direct deposit and withdrawal authority
Deposit timing
Cash is the strict case: earnest money received as U.S. currency must be deposited immediately. There is no grace period built into the rule and no good reason to hold cash overnight.
Checks follow the contract. If the purchase agreement states when the check is to be deposited, that timeline controls. If the contract says nothing, deposit the check once the offer has ripened into a binding contract.
Whatever the instrument, confirm the deposit actually landed and keep a copy of the check or the wire confirmation. That single piece of paper resolves most future disputes and is exactly what an auditor asks for.
Disbursement on a successful closing
When the transaction is consummated, the earnest money must be promptly disbursed to the parties entitled to it — within seven business days of consummation. Business days means the count skips weekends, so a Friday closing gives you until the following Tuesday in a normal week.
Build the disbursement into your closing routine rather than treating it as a separate errand. Overdue trust disbursements are one of the easiest violations for an auditor to find, because the dates are right there in the journal.
Disbursement when the deal fails
If the transaction falls through, a broker holding the earnest money cannot simply decide who deserves it. Funds may be released only on a mutual written agreement between the parties, or on a court order. Absent one of those, the broker holds.
That is protection, not obstruction: it keeps the brokerage out of a dispute it has no authority to resolve. Record which basis you relied on — mutual written agreement or court order — with the disbursement entry.
When a third party holds the money
Earnest money held by a third party — a closing attorney or title company, for example — falls outside the Commission's oversight of the broker's trust accounts, and that arrangement must be stated in the contract.
That does not make it someone else's problem. Ask the third-party holder, before the contract is signed, how they intend to handle disbursement if the deal fails, and note the answer in your file.