Trust Funds
Which of the following is NOT a permissible disbursement from a broker's trust account?
AReleasing funds to escrow at close of escrow
BReturning a deposit to a buyer after both parties agree in writing
CPaying the broker's office rent from accumulated trust funds✓ Correct
DDisbursing to the seller per escrow instructions
Explanation
Using trust funds to pay the broker's operating expenses (rent, utilities, payroll) is conversion — an illegal misuse of client funds. Trust funds may only be disbursed according to the parties' written instructions or court order.
Related California Trust Funds Questions
- Can a property management broker combine the security deposits for multiple tenants in a single trust account?
- Commingling in real estate refers to:
- When a real estate transaction closes, how should trust funds (e.g., the buyer's deposit) be handled?
- Can a broker keep their own money in a client trust account?
- Which of the following is considered a trust fund under California law?
- 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 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:
- 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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