Trust Funds
A broker receives a $10,000 earnest money deposit in cash from a buyer. The broker must:
AImmediately give a receipt and deposit it into the trust account within 3 business days✓ Correct
BReturn cash to the buyer and require a personal check or wire
CNotify the IRS only if the amount exceeds $25,000
DHold the cash in a safe until escrow opens
Explanation
Cash is a trust fund and must be handled just like any other trust funds: give a receipt and deposit into the trust account within 3 business days. Additionally, transactions involving cash of $10,000 or more trigger federal IRS Form 8300 reporting requirements.
Related California Trust Funds Questions
- A salesperson receives an earnest money check from a buyer. What must the salesperson do with the check?
- What is 'conversion' of trust funds?
- When may a broker withdraw funds from their trust account?
- Which of the following is NOT a permissible trust account?
- Which statement about a broker's trust account is TRUE?
- What is 'conversion' in the context of trust funds?
- What records must a California broker maintain for their trust account?
- A buyer's earnest money is being held by the listing broker. The transaction falls through and there is a dispute about who is entitled to the funds. What should the broker do?
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