Which statement best describes a brokerage's role when handling a purchase deposit?

• A. Brokerage must place the deposit into a trust account
• B. Brokerage may release funds to the seller anytime
• C. Stakeholder status means the brokerage keeps funds until a court orders release
• D. Stakeholder status applies only to mortgage funds

Answer: (A)

Handling a purchase deposit hinges on safeguarding client funds through a trust account. The broker acts as a fiduciary for the buyer (and, as applicable, the seller) and must place the deposit into a trust account, keeping it separate from the brokerage’s own money. This protects the funds and ensures they can be properly applied at closing or returned if the deal doesn’t proceed, according to the terms of the agreement. Funds are not released to the seller at the broker’s whim; release happens only per the contract, with proper instructions, or by court order if a dispute needs resolution. The idea of “stakeholder” status is not the ordinary description for a typical purchase deposit and does not mean the broker keeps the funds; it exists only in specific contexts and is not limited to mortgage funds.