Trust 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:
ADeposit the check immediately into the trust account
BHold the check uncashed as instructed and disclose this to the seller✓ Correct
CReturn the check to the buyer until acceptance
DForward the check to the escrow company
Explanation
California law allows a broker to hold an uncashed check if instructed by the buyer and the seller is informed of this arrangement. The broker must disclose to the seller that the check is being held uncashed. If the offer is accepted, the check must be deposited within 3 business days.
Related California Trust Funds Questions
- What is 'conversion' of trust funds?
- 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's trust fund account must be reconciled:
- A property manager receives a security deposit from a tenant. Under California Civil Code, residential security deposits may NOT exceed:
- Which California law specifically governs a real estate broker's obligations with respect to trust funds?
- A broker may maintain a personal (broker's) funds balance in the trust account of up to how much to cover bank service charges?
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