Broker Lisa maintains a trust account for earnest money deposits received from clients. Under Alabama license law and AREC rules, which of the following is a correct statement regarding Alabama trust account requirements?
Correct Answer
D) Trust accounts must be maintained in a federally insured financial institution and kept separate from the broker's personal and operating funds.
Alabama license law and AREC rules under Alabama Administrative Code Chapter 790-X require that all trust funds (including earnest money) be deposited into a separate trust account maintained at a federally insured financial institution. The trust account must be kept entirely separate from the broker's personal funds and business operating accounts to prevent commingling.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Antitrust violations in real estate occur when competing brokerages or agents engage in practices that restrain trade, reduce competition, or harm consumers through collusion. These violations are governed by the Sherman Antitrust Act and can result in severe penalties.
Broker supervision is the legal obligation of a designated or managing broker to oversee and be accountable for the real estate activities of all salespersons and associate brokers operating under their license.
Commingling is the illegal act of mixing client funds with a broker's personal or business operating funds, while conversion is the unauthorized use of client funds for the broker's own benefit. Both are serious violations that can result in license revocation.
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