Trust Funds
A broker who holds a disputed earnest money deposit and cannot get agreement from the parties may:
AKeep the funds until the dispute resolves itself
BReturn all funds to the buyer immediately
CFile an interpleader action with the court to have a judge decide who gets the funds✓ Correct
DGive the funds to the seller since they are usually the aggrieved party
Explanation
When parties dispute entitlement to trust funds and cannot agree, the broker should file an interpleader action — depositing the funds with the court and letting a judge determine rightful ownership — to avoid liability.
Related California Trust Funds Questions
- A broker who violates trust fund regulations is subject to which of the following penalties?
- How often must a broker reconcile the trust fund bank account balance with the total of all client ledger balances?
- If a broker discovers a shortage in the trust account caused by a bank error, what is the BEST course of action?
- A broker receives a $5,000 earnest money deposit on a Friday at 5 PM. The three-business-day deposit deadline would be:
- Under California law, a real estate broker must deposit trust funds received into the trust account no later than:
- A DRE audit of a broker's trust account reveals that the balance of individual client ledgers is less than the total bank balance. This condition is called:
- What is the maximum amount a broker may keep in their trust account from personal funds?
- If a buyer's check for earnest money is made payable to the listing broker, and the buyer instructs the broker to hold the check uncashed until the offer is accepted, the broker should:
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →