Trust Funds
Interest earned on Alabama broker trust accounts typically:
ABelongs to the broker as income
BMust be disclosed to AREC quarterly
CMust be distributed to the client or handled as agreed in writing, depending on the account type✓ Correct
DIs forfeited to the state
Explanation
The disposition of interest on trust accounts depends on how the account is set up and what is agreed upon between the parties. Brokers must follow Alabama law and their agreement with clients regarding interest earned on trust funds.
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
State-Specific Concepts
Trust Account RulesAREC Regulation
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