Alaska License LawIntermediateAlaska Exam
Which of the following actions by an Alaska licensee constitutes 'conversion' of trust funds?
ADepositing earnest money in a trust account within 3 days
BUsing a client's trust funds for the broker's personal expensesCorrect
CTransferring funds between two different client trust accounts
DSimply merely depositing trust funds into a non-interest-bearing account, an authorized handling method rather than the actual unauthorized personal use that constitutes conversion
Why Using a client's trust funds for the broker's personal expenses Is Correct
Answer B: Using a client's trust funds for the broker's personal expenses
Conversion is the unauthorized use of a client's funds for any purpose other than those specified by the client. Using trust funds for personal or business expenses is a serious violation that can result in license revocation, criminal charges, and civil liability.
Key Alaska License Law Terms in This Question
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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.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Promissory NoteA written promise to repay a loan under specified terms — the borrower's personal financial obligation in a real estate transaction.
Math Concepts
State-Specific Concepts
Trust Account Rules
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