Trust Funds
Conversion of trust funds occurs when a broker:
AConverts an escrow account from checking to savings
BUses client funds for personal or business expenses✓ Correct
CMoves funds between two trust accounts
DInvests trust funds in certificates of deposit
Explanation
Conversion is the unauthorized use of client funds for the broker's own benefit or business expenses, which is both a violation of license law and potentially criminal fraud.
Related Alabama Trust Funds Questions
- AREC's trust account audit authority is intended primarily to:
- How long must Alabama brokers retain trust account records?
- Which of the following is NOT an acceptable reason for a broker to withdraw funds from an Alabama trust account?
- A property manager collects monthly rents of $50,000 on behalf of property owners. These funds must be:
- Interest earned on Alabama broker trust accounts typically:
- When a real estate transaction closes, how should the earnest money be handled?
- A qualifying broker is responsible for the trust account actions of all licensees in their firm. This is an example of:
- In Alabama, who is ultimately responsible for ensuring that client funds are properly maintained in the trust account?
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