Which of the following must be deposited in a client's trust account or neutral escrow?

Which of the following must be deposited in a client's trust account or neutral escrow?

• A. Owner's equity
• B. Earnings from sales
• C. Earnest money deposits
• D. Broker commission

Answer: (C)

The requirement for depositing certain funds in a client's trust account or neutral escrow is primarily to ensure that client funds are properly managed and protected. Earnest money deposits are considered reflective of the buyer's serious intent to purchase a property, thus they must be held in a secure manner until the transaction is finalized or falls through. Depositing earnest money in a trust account or neutral escrow is a legal requirement that helps prevent commingling of client funds with the broker's personal funds. This ensures transparency and protection for both buyers and sellers, maintaining a clear audit trail for any financial transactions related to the real estate purchase. In contrast, owner's equity, earnings from sales, and broker commissions are associated with the broker's operational funds and revenues and do not require the same protective measures as earnest money deposits. As a result, earnest money deposits are specifically the type of funds that must be handled through a trust account or neutral escrow, reinforcing their importance in real estate transactions.

The requirement for depositing certain funds in a client's trust account or neutral escrow is primarily to ensure that client funds are properly managed and protected. Earnest money deposits are considered reflective of the buyer's serious intent to purchase a property, thus they must be held in a secure manner until the transaction is finalized or falls through.

Depositing earnest money in a trust account or neutral escrow is a legal requirement that helps prevent commingling of client funds with the broker's personal funds. This ensures transparency and protection for both buyers and sellers, maintaining a clear audit trail for any financial transactions related to the real estate purchase.

In contrast, owner's equity, earnings from sales, and broker commissions are associated with the broker's operational funds and revenues and do not require the same protective measures as earnest money deposits. As a result, earnest money deposits are specifically the type of funds that must be handled through a trust account or neutral escrow, reinforcing their importance in real estate transactions.