Trust Funds
Which of the following is the best description of a broker's fiduciary duty regarding trust funds?
AThe broker may use trust funds for short-term business expenses if replenished quickly
BThe broker must safeguard all client funds with the highest level of care and maintain complete, accurate records✓ Correct
CTrust funds may be invested in low-risk securities to earn interest for the broker
DThe broker has discretion over how to manage client funds
Explanation
Brokers have a strict fiduciary duty to safeguard client trust funds, keep accurate records, never commingle or convert funds, and disburse only per proper authorization.
Related Alabama Trust Funds Questions
- In Alabama, an earnest money deposit held by a real estate broker must be:
- How long must Alabama brokers retain trust account records?
- Which of the following is NOT a permissible use of an Alabama broker's trust account?
- Conversion of trust funds occurs when a broker:
- A broker may disburse funds from a trust account based on:
- AREC's trust account audit authority is intended primarily to:
- When must an Alabama broker deposit earnest money received from a buyer into the trust account?
- If a disputed earnest money situation cannot be resolved between buyer and seller, the broker may interplead the funds. 'Interpleading' means:
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