Trust Funds
Which of the following is permissible in an Alabama broker's trust account?
AThe broker's operating funds to cover bank fees
BA client's earnest money deposit✓ Correct
CThe broker's personal savings
DCommission funds already earned by the broker
Explanation
Only client funds such as earnest money deposits, security deposits, and advance rents should be held in a trust account. The broker's own funds must be kept separate.
People Also Study
Related Alabama Questions
- A broker maintains a trust account with a balance of $50,000 representing multiple clients' earnest money deposits. The broker should: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
- After a real estate closing in Alabama, the broker should disburse the earnest money trust funds:Trust Funds
- In Alabama, earnest money is held by the broker in a:Contracts
- 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, a broker's trust account records must be maintained for a minimum of:Alabama License Law
Key Terms to Know
Earnest Money
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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Math Concepts
State-Specific Concepts
Trust Account RulesEscrow Disputes
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 →