Trust Funds
Which statement about a broker's trust account is TRUE?
AA broker may use one personal checking account for both business expenses and trust funds
BThe trust account must be designated as such and may not be used for the broker's operating expenses✓ Correct
CA broker is not required to maintain a trust account if all transactions go through escrow
DSalespersons may maintain sub-accounts within the broker's trust account
Explanation
The trust account must be clearly designated as a trust account and used exclusively for clients' funds. It cannot be used for the broker's business operating expenses. Even if all transactions use escrow, if the broker ever receives trust funds directly, a trust account is required.
Related California Trust Funds Questions
- A broker receives a commission payment directly from the seller at closing. This money should be deposited into:
- What is 'conversion' in the context of trust funds?
- A broker's trust fund account must be reconciled:
- Which of the following is considered 'commingling' of trust funds?
- Under California law, a real estate broker must deposit trust funds received into a neutral escrow or into the broker's trust fund account no later than:
- A broker receives an earnest money check made out to the seller. The buyer instructs the broker to hold the check uncashed until offer acceptance. The broker MUST:
- A broker receives a $5,000 earnest money deposit on a Friday at 5 PM. The three-business-day deposit deadline would be:
- Can a broker keep their own money in a client trust account?
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