Trust Funds
Which of the following would be considered an acceptable reason to withdraw funds from a trust account?
AThe broker needs to pay office rent
BThe broker wants to earn interest temporarily
CDisbursement to the appropriate party at or after closing per contractual terms✓ Correct
DThe broker lost their own checkbook
Explanation
Trust funds may only be withdrawn for proper disbursements — such as releasing earnest money to the appropriate party at closing or as directed by both parties in writing. Using trust funds for any other purpose is a serious violation.
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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.
ProrationThe division of ongoing property expenses (taxes, HOA dues, rents) between buyer and seller at closing based on their respective days of ownership.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
State-Specific Concepts
Trust Account Rules
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