Alabama Reciprocal Broker Practice Exam 2025 – All-in-One Preparation

Question: 1 / 400

Holding earnest money without depositing it is _____.

illegal unless stated otherwise

legal if done with written authority

Holding earnest money without depositing it is legal if done with written authority. In real estate transactions, earnest money is typically required to show a buyer's good faith intent to proceed with a purchase. However, the handling of that earnest money is governed by specific regulations. When a broker has written authority from the buyer or seller, they may hold the earnest money in their trust account without immediately depositing it into an escrow or trust account. This written authority provides the necessary transparency and consent between parties, ensuring that all involved have agreed to the terms of holding the funds.

In contrast, without such written authority, the broker might run afoul of ethical or legal standards, as they would not have the proper consent to manage or hold on to those funds.

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allowed in all circumstances

only permitted for licensed brokers

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