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Knowledge Development Topic 2: Trust
Accounts – General Requirements &
Recordkeeping.
Q1. Under NC Real Estate Commission rules, a trust account is defined as:
A) Any bank account held by a broker
B) An account maintained by a broker for the deposit of funds belonging to others
C) A broker's personal savings account
D) An account maintained by the seller for earnest money
✔ Correct Answer: B
A trust account (also called an escrow account) is used to hold funds belonging to others, such as
earnest money, security deposits, and rents collected for landlords.
Q2. Which of the following funds MUST be deposited into a trust account?
A) Earnest money received from a buyer
B) Security deposits collected from tenants
C) Rent collected for a landlord
D) All of the above
✔ Correct Answer: D
All funds received by a broker that belong to others (clients, tenants, landlords) must be
deposited into a trust account. These include earnest money, security deposits, rents, and other
escrow funds.
Q3. A broker receives earnest money from a buyer. The check is dated Monday. The broker must
deposit the check by:
,A) Monday
B) Tuesday
C) Wednesday
D) Thursday
✔ Correct Answer: D
Monday (day 0), Tuesday (day 1), Wednesday (day 2), Thursday (day 3). Deposit within 3
business days of receipt.
Q4. A broker receives earnest money on a Friday after the bank has closed. The next business
day is Monday. The deposit must be made by:
A) Monday
B) Tuesday
C) Wednesday
D) Thursday
✔ Correct Answer: C
Friday (day 0), Monday (day 1), Tuesday (day 2), Wednesday (day 3). Deposit by end of
Wednesday.
Q5. The 3-business-day deposit rule applies to:
A) Earnest money only
B) All trust funds, including earnest money, security deposits, and rents
C) Only funds over $500
D) Only funds received from first-time homebuyers
✔ Correct Answer: B
*The 3-business-day deposit requirement applies to all trust funds received by a broker.*
Q6. A broker holds earnest money in a trust account. The transaction closes. The earnest money
should be disbursed:
A) Within 24 hours of closing
B) According to the closing statement, typically at or after closing
C) Within 30 days
D) Only when the buyer requests it
, ✔ Correct Answer: B
The closing attorney or escrow agent disburses earnest money as directed on the settlement
statement.
Q7. A broker receives a personal check for earnest money. The check bounces (NSF). The broker
must:
A) Ignore it
B) Notify all parties immediately and demand good funds
C) Deposit the check again
D) Pay the amount from the broker's personal funds
✔ Correct Answer: B
The broker must notify the buyer and seller immediately and obtain good funds (cash, certified
check, or wire).
Q8. A broker receives a cashier's check for earnest money. The broker:
A) May hold the check without depositing it for up to 7 days
B) Must deposit the check within 3 business days
C) May cash the check and hold the cash
D) May give the check directly to the seller
✔ Correct Answer: B
Cashier's checks are good funds but must still be deposited into the trust account within 3
business days.
Q9. A broker receives earnest money in the form of a wire transfer. The broker must:
A) Deposit the wire into the trust account upon receipt
B) Hold the wire in a separate account
C) Give the wire to the seller
D) Keep the wire in the broker's personal account
✔ Correct Answer: A
Wire transfers are deposited immediately. The broker must ensure the funds go into the trust
account.
Vault: High-Quality Exam Practice
Questions with Expertly Written, Accurate &
Detailed Answers for Comprehensive
Knowledge Development Topic 2: Trust
Accounts – General Requirements &
Recordkeeping.
Q1. Under NC Real Estate Commission rules, a trust account is defined as:
A) Any bank account held by a broker
B) An account maintained by a broker for the deposit of funds belonging to others
C) A broker's personal savings account
D) An account maintained by the seller for earnest money
✔ Correct Answer: B
A trust account (also called an escrow account) is used to hold funds belonging to others, such as
earnest money, security deposits, and rents collected for landlords.
Q2. Which of the following funds MUST be deposited into a trust account?
A) Earnest money received from a buyer
B) Security deposits collected from tenants
C) Rent collected for a landlord
D) All of the above
✔ Correct Answer: D
All funds received by a broker that belong to others (clients, tenants, landlords) must be
deposited into a trust account. These include earnest money, security deposits, rents, and other
escrow funds.
Q3. A broker receives earnest money from a buyer. The check is dated Monday. The broker must
deposit the check by:
,A) Monday
B) Tuesday
C) Wednesday
D) Thursday
✔ Correct Answer: D
Monday (day 0), Tuesday (day 1), Wednesday (day 2), Thursday (day 3). Deposit within 3
business days of receipt.
Q4. A broker receives earnest money on a Friday after the bank has closed. The next business
day is Monday. The deposit must be made by:
A) Monday
B) Tuesday
C) Wednesday
D) Thursday
✔ Correct Answer: C
Friday (day 0), Monday (day 1), Tuesday (day 2), Wednesday (day 3). Deposit by end of
Wednesday.
Q5. The 3-business-day deposit rule applies to:
A) Earnest money only
B) All trust funds, including earnest money, security deposits, and rents
C) Only funds over $500
D) Only funds received from first-time homebuyers
✔ Correct Answer: B
*The 3-business-day deposit requirement applies to all trust funds received by a broker.*
Q6. A broker holds earnest money in a trust account. The transaction closes. The earnest money
should be disbursed:
A) Within 24 hours of closing
B) According to the closing statement, typically at or after closing
C) Within 30 days
D) Only when the buyer requests it
, ✔ Correct Answer: B
The closing attorney or escrow agent disburses earnest money as directed on the settlement
statement.
Q7. A broker receives a personal check for earnest money. The check bounces (NSF). The broker
must:
A) Ignore it
B) Notify all parties immediately and demand good funds
C) Deposit the check again
D) Pay the amount from the broker's personal funds
✔ Correct Answer: B
The broker must notify the buyer and seller immediately and obtain good funds (cash, certified
check, or wire).
Q8. A broker receives a cashier's check for earnest money. The broker:
A) May hold the check without depositing it for up to 7 days
B) Must deposit the check within 3 business days
C) May cash the check and hold the cash
D) May give the check directly to the seller
✔ Correct Answer: B
Cashier's checks are good funds but must still be deposited into the trust account within 3
business days.
Q9. A broker receives earnest money in the form of a wire transfer. The broker must:
A) Deposit the wire into the trust account upon receipt
B) Hold the wire in a separate account
C) Give the wire to the seller
D) Keep the wire in the broker's personal account
✔ Correct Answer: A
Wire transfers are deposited immediately. The broker must ensure the funds go into the trust
account.
