Interest earned on a real estate trust account in California generally:
Why Must be credited to the individual client whose funds generated the interest Is Correct
Answer B: Must be credited to the individual client whose funds generated the interest
Exam Tip: Trust Funds
Trust fund questions test the rules for handling client money. Know the deadlines for depositing trust funds, what constitutes commingling vs. conversion, and the penalties for violations.
Key Trust Funds Terms in This Question
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- Under California law, a real estate broker who manages property for clients must maintain a separate trust account for client funds. Mixing client funds with the broker's personal funds is called:Agency
- Under California law, the maximum amount a broker may keep of their own funds in a trust account (to cover bank service charges) is:DRE & Licensing
- Interest earned on funds held in a broker's trust account generally belongs to:Trust Funds
- Can a broker keep their own money in a client trust account?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:Trust Funds
- When a real estate broker receives a deposit check from a buyer, California law requires the broker to place the funds in a trust account or deliver them to the escrow within:DRE & Licensing
- A real estate licensee in California is found to have commingled client funds with their personal bank account. This violates:DRE & Licensing
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Key Terms to Know
A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Closing CostsFees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
State-Specific Concepts
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