Trust Funds
Which of the following is an example of a trust fund?
ACommission earned by a broker
BEarnest money deposit held pending close of escrow✓ Correct
CAdvertising expenses paid from a business account
DA broker's draws against future commissions
Explanation
Trust funds are funds received by a broker or salesperson on behalf of another (principal, client, or third party). Earnest money deposits held pending close of escrow are the most common example of trust funds in real estate.
Related California Trust Funds Questions
- Can a broker keep their own money in a client trust account?
- 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:
- What are 'trust funds' in California real estate practice?
- If a buyer's offer is rejected and they had deposited earnest money, the broker must:
- 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:
- California regulations require that a broker maintain a 'trust fund bank account record' (journal). What does this record show?
- For how long must a California broker maintain trust fund records?
- When escrow is used in a California real estate transaction, trust funds are typically held by:
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