Trust Funds

An Alabama broker may make disbursements from the trust account based on:

AVerbal authorization from the client

BWritten instructions or authorization from the appropriate parties✓ Correct

CThe broker's best judgment about the outcome

DAREC's prior approval for each disbursement

Explanation

Trust fund disbursements must be based on written authorization from the appropriate parties (buyer, seller, or both) or pursuant to a court order or arbitration decision.

People Also Study

Key Terms to Know

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

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.