Oregon Broker PSI Practice Exam

Which of the following actions requires that earnest money be held in a trust account?

1. A closing statement

2. Client transactions

3. Virtual meetings

4. Broker commissions

The correct answer is: Client transactions

The requirement for earnest money to be held in a trust account is fundamental to the proper management of client transactions in real estate. When a buyer makes an offer on a property, they typically submit earnest money as a show of good faith, demonstrating their serious intent to complete the purchase. Holding this earnest money in a trust account ensures that it is kept separate from the broker's personal or business funds, thereby providing added protection for both the buyer and the seller. This segregation of funds not only complies with legal and ethical standards but also helps to avoid potential conflicts of interest and safeguard the financial interests of the parties involved. In the context of client transactions, placing earnest money in a trust account fosters a transparent handling of funds and contributes to a trust-based relationship between the broker and the clients. Therefore, it is a standard practice to require earnest money to be held in a trust account specifically for client transactions.