Trust Funds
A broker receives an earnest money check from a buyer but the seller has not yet accepted the offer. The broker should:
ACash the check and hold the funds in their operating account until acceptance
BReturn the check to the buyer until acceptance
CHold the check uncashed or deposit it per written instructions, pending acceptance or per the contract terms✓ Correct
DSend the check directly to the seller
Explanation
Alabama practice and AREC guidance generally require brokers to hold earnest money checks uncashed (or deposit them per the contract terms) pending offer acceptance. The broker must not cash the check and commingle funds — and must follow the specific terms agreed to by the parties.
Related Alabama Trust Funds Questions
- In Alabama, the term for a broker's obligation to keep client funds separate from personal or business operating funds is:
- In Alabama, a qualifying broker who manages property for owners must maintain:
- Conversion of trust funds occurs when a broker:
- When a real estate transaction closes, how should the earnest money be handled?
- When a buyer's offer is rejected by the seller, the earnest money should be:
- AREC has the authority to audit a broker's trust account:
- Conversion of client funds in a trust account occurs when a broker:
- A broker maintains a trust account with a balance of $50,000 representing multiple clients' earnest money deposits. The broker should:
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