### What is the primary purpose of a trust account in real estate transactions? - [x] To facilitate the transfer of funds from one party to another - [ ] To store personal savings of real estate brokers - [ ] To lend money to buyers - [ ] To manage rental income for property owners > **Explanation:** In real estate transactions, a trust account is used primarily to facilitate the transfer of funds from the buyer to the seller. It ensures that the money is safe and available at the time of closing, benefiting both parties involved. ### Who typically holds a trust account during a real estate transaction? - [ ] The buyer - [ ] The seller - [ ] The lending bank - [x] The real estate broker > **Explanation:** A trust account in a real estate transaction is typically held by the real estate broker. This broker manages the funds and ensures that the money is safely transferred from the buyer to the seller at the appropriate time. ### What benefit does the seller receive from money being deposited into a trust account? - [ ] They earn interest on the escrow funds - [x] They are assured that the buyer's funds will be available at closing - [ ] They can withdraw the funds anytime before closing - [ ] They avoid paying closing costs > **Explanation:** The primary benefit to the seller is the assurance that the buyer's funds are secured and will be available at closing. This ensures a smooth transaction as the buyer's check has cleared and is held in the broker's trust account. ### How does a trust account benefit the buyer in a real estate transaction? - [x] It ensures their money is secure in case of any disputes - [ ] It allows the buyer to avoid paying taxes - [ ] It earns interest for the buyer - [ ] It reduces the overall transaction price > **Explanation:** A trust account benefits the buyer by ensuring their money remains secure and protected in the event of any disputes. This provides the buyer with confidence that their funds are being handled properly and safely. ### What happens to the funds in the trust account if a dispute arises before closing? - [x] The funds remain in the trust account until the dispute is resolved - [ ] The funds automatically go to the seller - [ ] The funds are returned to the buyer immediately - [ ] The funds are forfeited to the real estate broker > **Explanation:** If a dispute arises before closing, the funds stay in the broker's trust account until the dispute is resolved. This arrangement protects both parties and ensures that neither suffers unduly because of the dispute. ### In what situation is a trust account typically used? - [ ] During a stock market trade - [ ] In personal banking - [x] In a real estate transaction - [ ] For purchasing vehicles > **Explanation:** Trust accounts are typically used in real estate transactions to manage and secure funds being transferred between buyers and sellers, ensuring that all parties are protected until the deal is finalized. ### Why is it important for the buyer's check to clear before depositing funds into the trust account? - [ ] The buyer pays fees for check clearance - [x] It guarantees that the buyer's funds are legitimate and available - [ ] The seller can earn interest on cleared funds - [ ] The broker benefits from cleared checks > **Explanation:** It is important for the check to clear before depositing the funds into the trust account to guarantee that the buyer's funds are legitimate and available. This provides security to the seller that the necessary funds will be there at closing. ### Who benefits from the arrangement of a trust account in a real estate transaction? - [ ] Only the buyer - [ ] Only the seller - [ ] Only the real estate broker - [x] Both the buyer and seller > **Explanation:** Both the buyer and the seller benefit from the arrangement of a trust account. It protects the buyer by ensuring their money is secure, and it guarantees the seller that the funds will be available at closing. ### What differentiates a trust account from a personal savings account? - [**x**] A trust account is used to facilitate transactions for clients - [ ] A trust account earns more interest - [ ] A trust account can only be opened by individuals - [ ] A trust account is used for personal expenses > **Explanation:** A trust account is maintained by professionals like attorneys or real estate brokers to facilitate transactions for clients, ensuring security and proper handling of funds. It differs from personal savings accounts which are used for individual needs. ### By using a trust account, who is primarily responsible for ensuring the funds are distributed correctly? - [ ] The buyer - [ ] The seller - [x] The real estate broker - [ ] The lending bank > **Explanation:** The real estate broker holding the trust account is primarily responsible for ensuring that the funds are distributed correctly and at the appropriate time, maintaining the integrity of the transaction.