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5.3 Trust Account
Vehicle Code Section 11737 requires autobrokers to maintain a trust account for customer deposits. This is a separate bank account — segregated from your operating funds — into which all customer deposits must be placed. You cannot commingle brokering deposits with your business operating account. This is one of the most important compliance requirements for autobrokers, and violations are taken very seriously by DMV.
The trust account requirement exists for the same reason attorneys and real estate agents have trust accounts: it protects the customer’s money. If your brokering business has financial difficulties, the customer’s deposits in the trust account are protected from your business creditors. If you need to refund a deposit, the money is there — it hasn’t been spent on rent, inventory, or payroll.
You must maintain accurate records of the trust account, including deposits into the account, withdrawals (which should only be for completing the brokered transaction or issuing refunds), and the balance at any given time. DMV can audit your trust account, and they do. A trust account that doesn’t balance — where the amount on deposit doesn’t match the total of all unresolved customer deposits — is a major red flag that can trigger a full investigation of your brokering activities.
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❌ Common Mistake A broker deposits customer funds into the dealership’s general operating account “for convenience” and plans to move the money to the trust account later. Later never comes. When a customer requests a refund, the dealer has already spent the money on business expenses. The dealer can’t make the refund, the customer files a complaint with DMV, and the dealer faces both enforcement action and a bond claim. Always deposit customer funds directly into the trust account — no exceptions, no delays. |