Kentucky License Law
The principal broker's trust account in Kentucky may be used for:
APaying business operating expenses
BHolding earnest money and other client funds✓ Correct
CInvesting in real estate on behalf of the broker
DPaying agent commissions
Explanation
The broker's trust account is for holding client funds such as earnest money, security deposits, and other funds held on behalf of clients. It must never be used for the broker's personal or business expenses.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
AgencyA legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Math Concepts
State-Specific Concepts
Trust Account Rules
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