After decades as a real estate attorney, Lynn Leegard is unsettled that home buyers are still writing paper checks for their earnest money.

A couple of years ago, Leegard started researching how to launch a company that would enable home buyers to submit their earnest money electronically, closing the last gap in what is otherwise a completely electronic process.

“The idea for TrustFunds really came from my passion of risk management for the industry,” she said.

In a typical house purchase, the buyer writes a check and gives it to their agent, who takes the check to the listing agent. The listing agent delivers that check to the trust account holder, who deposits the check and waits for the funds to clear the buyer’s bank.

It’s an inconvenience for those who have to deliver the check, but there’s also an element of risk for the professionals involved in the transaction, Leegard said. With the check changing hands multiple times, the buyers’ banking information is vulnerable and the people handling the check are responsible for its whereabouts.

And, at a time when many people do all their banking online, it’s a step in the homebuying process that seemed antiquated. When Leegard’s daughter, for example, bought her first house, her agent asked her to write a check for the earnest money, but she couldn’t because she didn’t have a check book. Fortunately, her husband did, otherwise she would have had to get a cashier’s check, deliver it to her agent and document the withdrawal for her mortgage lender.

Online transactions carry their own risk, and Leegard lacked the expertise needed to tackle the technical issues including programming and e-commerce components of the process. So she teamed up with four partners with experience in electronic payment technology, including one who was able to do much of the coding.

“We married together my knowledge about the real estate industry and their knowledge of how to securely do electronic payments,” she said.

For several years, Leegard has been vice president and general counsel of Coon Rapids-based Shamrock Development, which was founded by veteran developer Jim Stanton, who has developed dozens of commercial and residential developments, including thousands of high-end condominiums in and around downtown Minneapolis.

Before that, Leegard was vice president and general counsel of Edina Realty, vice president and corporate counsel with the St. Paul Port Authority and a past president of the Minnesota Association of Realtors.

TrustFunds is accessed directly from the Multiple Listing Service (MLS) via a link that’s embedded in the property listing, enabling the buyer’s agent to start the transfer process by clicking on an “earnest money deposit” link that triggers a request for the earnest money, which the buyer can transfer directly from their bank account to a trust account that includes a detailed history of the transaction.

The first MLS to sign up was Twin Cities-based NorthstarMLS, which manages the listing data in most of Minnesota and western Wisconsin and pays a nominal fee to include the TrustFunds link. The buyers also pay a small “convenience fee,” Leegard said.

“It was quite clear that TrustFunds would deliver immediate convenience and value to everyone involved in the real estate transaction,” John Mosey, President and CEO of NorthstarMLS, said in a statement. “But at the same time, it also vastly improves security and compliance.”

The service is also available with the Southeast Minnesota Realtors in Rochester and throughout southeastern Minnesota, and Leegard recently signed a contract with an MLS in Lexington, Ky.

Her goal is to completely streamline the homebuying process “just like we eliminated printed MLS books and phone calls for showings,” she said. “I really want to eliminate the paper check from the transaction in as many markets as we can.”

Patty Zuzek, an agent/assistant manager for Coldwell Banker Burnet and the president of the Minnesota Association of Realtors, used TrustFunds when she and her husband sold their home and purchased one this last summer.

“It was nice to have the option as it gave a sense of security of our personal data and the buyers as it was all handled on a secured site,” she said. “I was shocked there was not anything like it in our industry, it is long overdue for our industry.”

Zuzek said that as a brokerage manager, the service eliminates some of the regulatory risk that comes with handling clients’ money, and it’s an easier way to prove to the buyers’ lenders that the earnest has cleared the bank and has been processed properly.

As a listing agent, she uses it on as many transactions as possible. “It’s more reliable than a check and helps with the timeliness,” she said. “The majority of our consumers do not carry a checkbook.”