What type of account must brokers use to hold client funds?

Brokers are required to use a trust account to hold client funds, which serves as a safeguard to protect clients' money. This type of account is specifically designed for managing and keeping financial resources in a fiduciary capacity, meaning it is held in trust for the benefit of the clients. Trust accounts ensure that client funds are kept separate from the broker's personal or business funds, which is essential for maintaining ethical standards and compliance with legal regulations.

Using a trust account provides transparency and accountability. It helps brokers track client funds and ensures that they are being used solely for the intended purposes, such as earnest money deposits or funds related to real estate transactions. This separation is crucial in real estate transactions to prevent misappropriation of client funds and to fulfill the fiduciary duties that brokers owe their clients.

In contrast, checking accounts, savings accounts, and commission accounts are typically used for different purposes and do not meet the specific requirements set forth for handling client funds in a real estate context. These accounts do not offer the same level of protection and transparency needed for managing client investments.