An MLS brokerage account is where a real estate agent or broker holds client money while a transaction is in progress
An MLS (Multiple Listing Service) brokerage account is a trust account that real estate brokers are required by law to maintain. It holds earnest money deposits, down payments, and other client funds during the buying, selling, or leasing of property. The money sits in this account — not in the broker's personal account — until the transaction closes or the deal falls through.
When someone dies and had an active real estate transaction, their money may still be in one of these accounts. The broker cannot straightforward release it to the estate without proper documentation. Understanding what this account is and how it works matters because it affects how long it takes to recover the funds and what paperwork the estate will need to provide.
The account itself is not owned by the broker. It is a custodial account — the broker holds the money on behalf of the clients involved in the transaction. State real estate commissions regulate these accounts strictly, and brokers face penalties if they mishandle the funds or fail to account for them properly.
Key Takeaways
- An MLS brokerage account is a trust account where brokers hold client money during real estate transactions, not a personal account belonging to the broker.
- If a deceased person had earnest money or a down payment in one of these accounts, the estate will need to provide a death certificate and proof of authority to claim the funds.
- The broker cannot release the money until the transaction closes, the deal is cancelled, or the estate provides legal documentation showing who has the right to it.
- State real estate commissions regulate these accounts and require brokers to keep detailed records of every deposit and withdrawal.
- The timeline for recovering funds depends on whether the transaction is still active, whether the other party agrees to cancel it, and how quickly the estate provides required documents.
How money enters and leaves a brokerage account
When a buyer makes an offer on a property, they typically deposit earnest money — usually 1 to 3 percent of the purchase price — into the broker's trust account. This shows the seller that the buyer is serious. The money stays there until closing, at which point it is applied to the down payment or closing costs. If the deal falls through for a reason covered by the contract, the earnest money goes back to the buyer.
A seller's agent may also hold funds in the account temporarily — for example, if the seller needs to make repairs before closing and the buyer agrees to hold back part of the purchase price. In rare cases, a broker holds a security deposit from a tenant or a lease deposit from a landlord.
The broker is required to keep the account separate from their operating funds. They cannot use client money to pay their own bills or cover business expenses. Every deposit and withdrawal must be documented and reconciled monthly. State real estate commissions audit these accounts and can fine or revoke a broker's license if the records do not match the actual money in the bank.
What happens to the account when the account holder dies
If the person who deposited the money dies before the transaction closes, the broker cannot straightforward hand the money to whoever asks for it. The broker must verify who has the legal right to the funds. This usually means the estate executor or administrator — the person appointed by the court to manage the deceased's assets.
The broker will ask for a death certificate and a copy of the court order or letters testamentary showing that the executor has authority. Some brokers also ask for an affidavit or a letter from the estate's attorney confirming that the person requesting the funds has the right to do so. This protects the broker from liability if multiple people claim the money.
If the transaction is still active — the property has not closed and the contract has not been cancelled — the broker may need permission from the other party (the seller or the buyer, depending on which side the deceased was on) before releasing the funds. The contract itself may specify what happens to earnest money if one party dies.
The difference between an active transaction and a closed one
If the property has already closed, the earnest money was applied to the purchase or sale at closing. There is nothing left in the brokerage account to recover. The estate's concern would be whether the closing statement shows the correct amount applied and whether any overage or credit is owed.
If the transaction is still active and the contract is still in force, the money remains in the account. The executor can request that the transaction be cancelled and the earnest money returned, but this requires the agreement of the other party unless the contract allows cancellation for death. Some contracts do include a clause that allows either party to cancel if the other party dies, which would trigger an automatic return of earnest money.
If the transaction is in limbo — the contract was signed but the deal has stalled and neither party has formally cancelled — the money sits in the account indefinitely until someone takes action. The executor may need to contact the other party's agent or attorney to move the process forward.
How to locate a brokerage account and claim the funds
Start by gathering the deceased's real estate documents: purchase agreements, inspection reports, closing disclosures, or any correspondence with a real estate agent. These documents will name the broker and the brokerage firm. Call the brokerage office and ask to speak with the broker of record or the trust account manager. Provide the deceased's name and the property address.
The broker will confirm whether funds are still in the account and under what conditions they can be released. Bring or send a certified death certificate and the court documents showing the executor's authority. Some brokers accept a certified copy of the will if probate is still pending, but others require formal letters testamentary from the court.
If the transaction is still active, the executor may need to contact the other party's agent to discuss cancelling the contract. If the other party refuses to cancel and the contract does not allow cancellation for death, the executor may need to consult an attorney about the options.
State rules and variations in how brokers handle these accounts
Every state real estate commission sets rules for trust accounts, but the specifics vary. Some states require brokers to hold earnest money in an interest-bearing account and pay the interest to the client or the broker, depending on the contract. Others prohibit interest-bearing accounts. Some states allow brokers to hold earnest money in a non-interest account and keep any interest earned; others require it to go to a state bar association or a charity.
The timeline for releasing funds also depends on state law. Some states require brokers to release earnest money within a set number of days after the contract is cancelled. Others allow the broker to hold the money if both parties do not agree on who gets it, and the broker can file an interpleader action — a court proceeding where the broker deposits the money with the court and lets the parties fight over it.
If the deceased was in the middle of a transaction in a state you are not familiar with, ask the broker which state's real estate commission oversees the account. The broker's license number and the state will tell you where to file a complaint if the broker is not cooperating.
What to do if the broker is unresponsive or the funds are missing
If you contact the broker and do not hear back within a week, send a written request by certified mail. Include the deceased's name, the property address, the contract date, and a copy of the death certificate. Ask for a written response within 10 business days confirming the account balance and the conditions for release.
If the broker does not respond or claims the funds are missing, contact the state real estate commission. File a complaint with the commission's trust account division or enforcement section. Provide the broker's name, license number, the brokerage firm name, and the details of the transaction. The commission can investigate whether the broker mishandled the funds or failed to account for them properly.
If the funds were genuinely lost due to broker misconduct, the state may have a recovery fund — a pool of money set aside to compensate clients who suffer losses because of a broker's dishonesty or negligence. The requirements and limits vary by state, but most recovery funds require you to file a claim within a set time frame after discovering the loss.
Frequently Asked Questions
Can the executor withdraw the money without the other party's permission?
Not if the transaction is still active and the contract requires both parties to agree on the earnest money. If the contract allows cancellation for death or if the other party agrees to cancel, yes. If the other party refuses and the contract is silent on death, the executor may need a court order to access the funds.
How long does it take to get the money back?
If the transaction is cancelled and both parties agree, the broker usually releases the earnest money within 5 to 10 business days of receiving the cancellation notice. If the executor must provide court documents first, add another 1 to 2 weeks. If the other party disputes the cancellation, it can take months or require a court proceeding.
What if the broker says the money was already released to the other party?
Ask the broker for a copy of the cancelled check, the wire transfer receipt, or the bank statement showing the release. The broker should have documentation of every transaction. If the broker cannot produce it, file a complaint with the state real estate commission.
Is the money in a brokerage account protected if the broker goes out of business?
Yes. By law, the money in a trust account belongs to the clients, not the broker. If the broker closes or files for bankruptcy, the trust account is kept separate and the funds go to the clients. However, if the broker misappropriated the money before closing, the state recovery fund may be the only source of compensation.
Do I need an attorney to claim the funds?
Not always. If the broker cooperates and the other party agrees to cancel the transaction, you can handle it yourself with the death certificate and court documents. If the other party disputes the cancellation or the broker is unresponsive, an attorney familiar with real estate law in your state can help navigate the dispute or file a claim with the state recovery fund.