Trust FundsIntermediateAlabama Exam

Alabama regulations require a broker to maintain their trust account in a financial institution located in:

AAny state in the United States

BAlabamaCorrect

CThe state where the property is located

DThe state where the buyer is from

Why Alabama Is Correct

Answer B: Alabama

Alabama requires broker trust accounts to be maintained in a federally insured financial institution in Alabama.

Exam Tip: Trust Funds

Trust fund questions test the rules for handling client money. Know the deadlines for depositing trust funds, what constitutes commingling vs. conversion, and the penalties for violations.

People Also Study

Key Terms to Know

Deed of Trust

A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.

Escrow

A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.

Closing Costs

Fees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.

Proration

The division of ongoing property expenses (taxes, HOA dues, rents) between buyer and seller at closing based on their respective days of ownership.