Trust Funds
Interest earned on funds held in a broker's trust account generally belongs to:
AThe broker
BThe client whose funds generated the interest✓ Correct
CThe State of California
DThe DRE's recovery fund
Explanation
Unless otherwise agreed in writing, interest earned on trust funds belongs to the client (beneficiary) whose funds are on deposit, not the broker. Brokers may not retain interest as additional compensation without client consent.
Related California Trust Funds Questions
- 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:
- What is a 'columnar cash record' (general journal) in trust fund accounting?
- What constitutes 'misappropriation' of trust funds?
- Which of the following records is a broker required to maintain for the trust fund account?
- A buyer's earnest money is being held by the listing broker. The transaction falls through and there is a dispute about who is entitled to the funds. What should the broker do?
- Commingling in real estate refers to:
- Which of the following is NOT a permissible trust account?
- A salesperson who works for Broker A receives an earnest money deposit. Without telling Broker A, the salesperson deposits it into the salesperson's own personal account. This is:
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