California Real Estate Broker ExaminationReal Estate PracticeHard
A California real estate broker receives an earnest money deposit check from a buyer. According to California Department of Real Estate (DRE) regulations, how long does the broker typically have to deposit these funds into a trust account or deliver them to the principal/escrow?
- AImmediately, or by the next business day.
- BWithin 3 business days of receipt.
- CWithin 5 calendar days of receipt.
- DWithin 10 calendar days of receipt.
Show answer & explanationAnswer & explanation
Correct answer: B. Within 3 business days of receipt.
California DRE regulations (specifically Business and Professions Code Section 10145 and Commissioner's Regulation 2832) generally require a broker to deposit trust funds into a neutral escrow depository or trust account, or deliver them to the principal, within three business days following receipt.
Why the other options are wrong
- A. While good practice, 'immediately' or 'next business day' is stricter than the DRE's three-business-day rule.
- C. This is an incorrect timeframe; California uses business days and specifies 'three'.
- D. This is an incorrect timeframe; California specifies 'three business days'.
CA Trust Fund Handling
California real estate brokers must promptly deposit or deliver all trust funds received (e.g., earnest money, rents) within a specific timeframe to a neutral escrow, the principal, or a trust account, as mandated by DRE regulations.
- Funds must be deposited within 3 business days.
- Must be kept separate from broker's personal and operating funds.
- Detailed record-keeping is required for all trust fund transactions.
Memory trick: Trust funds are serious, 3 days to deposit, no delays, or you'll pay.