Trust FundsIntermediateAlabama Exam

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

AVerbal authorization from the client

BWritten instructions or authorization from the appropriate partiesCorrect

CThe broker's best judgment about the outcome, under standard practice

DAREC's prior approval for each disbursement

Why Written instructions or authorization from the appropriate parties Is Correct

Answer B: Written instructions or authorization from the appropriate parties

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.

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.

Key Trust Funds Terms in This Question

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.

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.