Peter Lohmann explains that property managers must hold all client money in trust accounts, not just security deposits. Rents, payables, property expenses, and any funds that don't belong to the manager must be segregated. It's a legal requirement under state and federal law.
What I refer to as a client trust, so to speak, is what a lot of you guys in your industry refer to as operating, right? It's like you're operating funds for it, for those properties, which is rents, payables, property expenses, whatever. And then you have your security deposit. A lot of companies in your industry, it's a very common misconception, think that the only funds that need to be held in trust are security deposits. Really the best rule of thumb, and this is why this matters on both levels, anytime you're holding funds that don't belong to you, they must be held in trust. 100%. Even if it's for 5 minutes, right? But that is, that happens all the time. And people say like, well, I don't have to hold that in trust. Well, you do. Not just from a state perspective, from a federal perspective as well.
