California Real Estate SalespersonPractice of Real Estate and DisclosuresMedium
A broker receives a $5,000 earnest money deposit from a buyer on Monday. According to California trust fund handling rules, by when must the broker deposit these funds into a trust account or the seller's account, if not held uncashed per instructions?
- AWithin 10 business days of receipt
- BBy the end of the same business day
- CWithin 3 business days of receipt
- DWithin 5 calendar days of receipt
Show answer & explanationAnswer & explanation
Correct answer: C. Within 3 business days of receipt
California law (Commissioner's Regulations) requires brokers to deposit trust funds into a neutral escrow depository or trust account no later than 3 business days following receipt, unless the funds are held uncashed pursuant to instructions.
Why the other options are wrong
- A. 10 business days far exceeds the legal deadline.
- B. Same-day deposit is not the legal standard; 3 business days is allowed.
- D. 5 calendar days is not the correct standard under California law.
Trust Fund Deposit Deadline
California brokers must deposit trust funds received on behalf of others into a trust account or neutral escrow within 3 business days of receipt.
- 3 business day rule applies to broker trust accounts
- Funds may be held uncashed only if buyer/seller instructs and seller is informed
- Commingling trust funds with broker's personal funds is prohibited
Memory trick: Three days to bank the buyer's cash