Trust Funds
What is a 'neutral escrow' and when is it used for trust funds?
AAn escrow company that represents neither buyer nor seller
BAn independent third party (escrow) that holds trust funds pursuant to written instructions when the broker's trust account is not appropriate✓ Correct
CAn escrow company chosen by the DRE
DAn escrow used only for commercial transactions
Explanation
A neutral (or outside) escrow can be used when the parties want a neutral third party — not the broker — to hold funds. Using a licensed neutral escrow in accordance with written instructions is an acceptable alternative to the broker's trust account for certain transactions.
Related California Trust Funds Questions
- If a buyer's offer is rejected and they had deposited earnest money, the broker must:
- A salesperson collects an earnest money deposit from a buyer. What must the salesperson do with these funds?
- 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?
- A property manager receives a security deposit from a tenant. Under California Civil Code, residential security deposits may NOT exceed:
- What is a 'columnar cash record' (general journal) in trust fund accounting?
- What is 'conversion' of trust funds?
- When a real estate transaction closes, how should trust funds (e.g., the buyer's deposit) be handled?
- A broker who maintains a property management business must:
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