What is a 'neutral escrow' and when is it used for trust funds?
Why An independent third party (escrow) that holds trust funds pursuant to written instructions when the broker's trust account is not appropriate Is Correct
Answer B: An independent third party (escrow) that holds trust funds pursuant to written instructions when the broker's trust account is not appropriate
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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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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
State-Specific Concepts
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