Trust Funds
An Alabama broker who knowingly issues a check from the trust account with insufficient funds to cover it may face:
AOnly a civil lawsuit from the affected party
BCriminal charges for check fraud and AREC disciplinary action✓ Correct
CA warning from their bank only
DNo consequences if they cover the check within 5 days
Explanation
Issuing bad checks from a trust account can constitute criminal fraud and will trigger AREC disciplinary proceedings, including possible license revocation.
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Key Terms to Know
Proration
The division of ongoing property expenses (taxes, HOA dues, rents) between buyer and seller at closing based on their respective days of ownership.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Closing CostsFees 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.
Transfer TaxA tax imposed by state or local governments when real property ownership is transferred, typically based on the sale price.
State-Specific Concepts
Trust Account RulesAREC Regulation
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