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Alabama · Ala. Code §34-27-36(a)(8)Alabama earnest money: the separate account, no commingling and three years of records

Under Alabama's real estate license law, the Real Estate Commission may discipline a licensee for failing, within a reasonable time, to properly account for or remit money belonging to others, or for commingling it with the licensee's own funds (Ala. Code §34-27-36(a)(8)a.). A licensee must deposit and account for at all times all funds belonging to or held for others in a separate federally insured account or accounts in a financial institution located in Alabama (§34-27-36(a)(8)b.), and keep for at least three years a complete record of those funds showing to whom the money belongs, the date deposited, the date withdrawn and other pertinent information (§34-27-36(a)(8)c.). The statute doesn't set a number of days for the deposit; the purchase contract states who holds the earnest money and when it is due.

The rules

  1. 1. Separate account (§34-27-36(a)(8)b.)

    Federally insured, at a financial institution located in Alabama.

  2. 2. No commingling (§34-27-36(a)(8)a.)

    Others' money kept apart and accounted for or remitted within a reasonable time.

  3. 3. Records (§34-27-36(a)(8)c.)

    At least three years: owner, deposit date, withdrawal date.

  4. 4. Timing

    Set by the purchase contract; the statute gives no day count.

What the TC can do

  • Read the contract for who holds the earnest money and the deposit deadline, and calendar it.
  • Get the holder's written receipt and keep it on the file.
  • If the deal falls apart, send the release question to the agents and the holder in writing.

Questions about Alabama earnest money

Where must an Alabama broker keep earnest money?

In a separate federally insured account or accounts at a financial institution located in Alabama, not commingled with the licensee's own funds (Ala. Code §34-27-36(a)(8)a.–b.).

How long must Alabama brokers keep trust fund records?

At least three years, with a complete record showing to whom the money belongs, the date deposited and the date withdrawn (Ala. Code §34-27-36(a)(8)c.).

Related guides

Add the earnest money deadline as a dated task on the deal in ClosingCode.

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Source: Code of Alabama §34-27-36(a)(8) (alison.legislature.state.al.us, read October 29, 2026).

General information, not legal advice. ClosingCode is software; it is not a law firm or brokerage. This guide is not a substitute for the advice or services of an attorney.