Trust Funds
Which of the following BEST describes 'commingling' of funds?
ADepositing multiple clients' earnest money checks in the same trust account
BMixing client funds with the broker's personal or business funds✓ Correct
CSplitting commission between two brokers
DDepositing earnest money before acceptance of an offer
Explanation
Commingling is the illegal act of mixing client funds (such as earnest money or security deposits) with the broker's own personal or operating funds. All client funds must be held in a separate, designated trust or escrow account.
Related Alabama Trust Funds Questions
- 'Conversion' of trust funds occurs when a broker:
- Conversion of trust funds in Alabama means:
- When an earnest money deposit is forfeited by a defaulting buyer, how are the funds typically distributed?
- Alabama regulations require a broker to maintain their trust account in a financial institution located in:
- An escrow account for a real estate transaction in Alabama typically holds which of the following funds?
- A broker maintains a trust account with a balance of $50,000 representing multiple clients' earnest money deposits. The broker should:
- A buyer and seller disagree about who is entitled to the earnest money after a contract falls through. What should the Alabama broker do?
- Conversion of client funds in a trust account occurs when a broker:
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