Trust Funds
Conversion of client funds in a trust account occurs when a broker:
ATransfers funds to a different trust account
BUses client funds for the broker's own personal or business expenses✓ Correct
CInvests trust funds in a money market account
DReturns funds after a deal falls through
Explanation
Conversion is the illegal use of client trust funds for the broker's own purposes. It is one of the most serious violations under Alabama license law and can result in criminal charges as well as license revocation.
Related Alabama Trust Funds Questions
- An Alabama broker who fails to maintain proper trust account records may be subject to which penalty by AREC?
- When must an Alabama broker deposit earnest money received from a buyer into the trust account?
- After a real estate closing in Alabama, how quickly should trust funds be disbursed?
- A real estate broker's operating account is used for:
- An Alabama broker receives rental income on behalf of a property owner. These funds must be deposited into:
- In Alabama, a qualifying broker who manages property for owners must maintain:
- How long must Alabama brokers retain trust account records?
- A buyer and seller disagree about who is entitled to the earnest money after a contract falls through. What should the Alabama broker do?
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