Arkansas Real Estate Practice Exam

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What does 'trust funds' mean in real estate transactions?

Funds that belong to the principal broker
Any high-value transactions
Money or other value not belonging to the broker but received in connection
Only funds that are to be used for purchasing property

The correct answer is: Money or other value not belonging to the broker but received in connection

In real estate transactions, trust funds refer to money or other valuable assets that are managed by a third party on behalf of the buyer or seller. These funds may include earnest money, down payments, or other payments related to the real estate transaction. Option A is incorrect because trust funds do not necessarily only belong to the principal broker. Option B is incorrect because trust funds are specifically related to real estate transactions, not just any high-value transactions. Option D is incorrect because trust funds may also be used for other purposes, such as paying for inspections or closing costs. Only option C correctly captures the definition of trust funds in real estate transactions.