Trust Funds
If a buyer's check bounces after being deposited into the trust account, the broker should NOT:
ANotify the seller and the listing broker
BReport the incident to their bank
CUse funds from another client's trust account to cover the shortfall✓ Correct
DDocument the incident in their trust account records
Explanation
Using another client's trust funds to cover a shortfall caused by a returned check is conversion — a serious violation. Each client's funds must remain segregated.
Related Alabama Trust Funds Questions
- An Alabama broker's trust account is subject to AREC examination:
- In Alabama, a real estate broker's trust (escrow) account must be:
- Which of the following would be considered an acceptable reason to withdraw funds from a trust account?
- If an Alabama broker has a dispute about the disbursement of earnest money and cannot resolve it with the parties, the broker should:
- What is an IOLTA account in the context of real estate trust accounts?
- When a broker receives a post-dated check as earnest money, the best practice is to:
- 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?
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