Trust Funds
A buyer's earnest money deposit is held in the broker's trust account. The sale falls through with no dispute. The broker may release the deposit:
AImmediately to the buyer without any authorization
BOnly upon written instructions signed by all parties or a court order✓ Correct
CAfter 30 days if no dispute is filed
DTo whoever the broker believes is entitled to it
Explanation
When trust funds are held and a dispute arises (or even when both parties agree), the broker must not unilaterally release funds. Disbursement requires written instructions from all parties, a court order, or filing an interpleader action.
Related California Trust Funds Questions
- Which of the following is considered a trust fund under California law?
- What is a 'columnar cash record' (general journal) in trust fund accounting?
- A buyer and seller have a dispute over who is entitled to an earnest money deposit after a transaction falls through. The broker should:
- Under California law, a real estate broker must deposit trust funds received into the trust account no later than:
- A broker who violates trust fund regulations is subject to which of the following penalties?
- A property manager collects security deposits from tenants. Under California law, security deposits:
- 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:
- A broker must maintain a separate trust account ledger for each:
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