In Alabama, an earnest money deposit held by a real estate broker must be:
Why Placed in a separate escrow/trust account Is Correct
Answer B: Placed in a separate escrow/trust account
Exam Tip: Trust Funds
Trust fund questions test the rules for handling client money. Know the deadlines for depositing trust funds, what constitutes commingling vs. conversion, and the penalties for violations.
Key Trust Funds Terms in This Question
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
People Also Study
Related Alabama Questions
- In Alabama, the term for a broker's obligation to keep client funds separate from personal or business operating funds is:Trust Funds
- Under AREC rules, how quickly must a broker deposit earnest money or other trust funds after receipt?Trust Funds
- When must an Alabama broker deposit earnest money received from a buyer into the trust account?Trust Funds
- In Alabama, who is ultimately responsible for ensuring that client funds are properly maintained in the trust account?Trust Funds
- Alabama law requires that a company's real estate trust account be maintained:Alabama License Law
- A salesperson in Alabama receives an earnest money deposit. What must they do with it?Alabama License Law
- In Alabama, earnest money is held by the broker in a:Contracts
- In Alabama, earnest money deposited with a broker becomes the broker's property:Contracts
Key Terms to Know
A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
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.
Math Concepts
State-Specific Concepts
Study This Topic
Practice More Alabama Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alabama Quiz →