Trust Funds
When a real estate transaction closes, how should the earnest money be handled?
AReturned to the buyer
BApplied to the buyer's closing costs or down payment as specified in the contract✓ Correct
CRetained by the listing broker as their commission
DHeld in trust for 30 days after closing
Explanation
At closing, the earnest money is typically credited to the buyer and applied toward their down payment or closing costs, as specified in the purchase agreement. It is disbursed by the closing agent according to the closing disclosure.
Related Alabama Trust Funds Questions
- Conversion of trust funds in Alabama means:
- A real estate salesperson receives cash earnest money directly from a buyer. The salesperson should:
- In Alabama, the trust account ledger must reflect:
- If a buyer's offer is accepted by the seller and the buyer's check for earnest money is returned by the bank as NSF (non-sufficient funds), the broker should:
- A broker who holds earnest money from a buyer and the deal falls through due to a contract dispute must:
- When a buyer's offer is rejected by the seller, the earnest money should be:
- An escrow account for a real estate transaction in Alabama typically holds which of the following funds?
- Which of the following trust account activities would constitute commingling?
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