Escrow & Title
A NC broker who disburses trust funds without authorization from the parties involved has committed:
AA minor procedural error
BConversion of client funds — a serious violation subject to criminal charges and license revocation✓ Correct
CA RESPA violation only
DAn acceptable action if done to facilitate closing
Explanation
Unauthorized disbursement of trust funds (conversion) is a serious breach of fiduciary duty subject to criminal prosecution (embezzlement) and NCREC disciplinary action including license revocation.
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Key Terms to Know
Fiduciary Duty
The highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
State-Specific Concepts
Trust Account Rules
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