Trust Funds
When an earnest money deposit is forfeited by a defaulting buyer, how are the funds typically distributed?
AThe broker retains all of it
BAccording to the terms of the purchase contract, often split between broker and seller✓ Correct
CAlways returned to the buyer
DGiven to AREC for the Recovery Fund
Explanation
When earnest money is forfeited, distribution is governed by the purchase contract terms — commonly divided between the listing broker (as commission or expenses) and the seller.
Related Alabama Trust Funds Questions
- An Alabama broker's trust account is subject to AREC examination:
- In Alabama, a real estate broker's trust (escrow) account must be:
- How long must Alabama brokers retain trust account records?
- A broker receives an earnest money check from a buyer but the seller has not yet accepted the offer. The broker should:
- Which of the following trust account activities would constitute commingling?
- Interest earned on Alabama broker trust accounts typically:
- Which of the following is permissible in an Alabama broker's trust account?
- When a real estate transaction closes, how should the earnest money be handled?
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