North Carolina — Trust Accounts & Business Practices — North Carolina Real Estate — State Law Practice Test

This North Carolina Real Estate — State Law North Carolina — Trust Accounts & Business Practices practice set has 14 practice questions based on the official exam materials, each with an instant explanation.

Sample questions

Three questions from the North Carolina — Trust Accounts & Business Practices bank with the correct answer and an explanation. The practice quiz above draws 14 questions at random from the same bank.

1. A North Carolina broker receives a buyer's earnest-money check. Under NCREC trust-account rules, by when must the broker deposit it into a trust or escrow account?

   • No later than three banking days after the broker receives it — Correct answer
   • By the next business day after the broker receives it
   • Within three banking days after the contract reaches its effective date
   • Whenever the broker chooses, so long as it is before closing

   Explanation: NCREC Rule 21 NCAC 58A .0116 requires trust money (such as earnest money) to be deposited into a designated trust/escrow account no later than THREE banking days after the broker receives it. This is NC's own deadline — do not confuse it with another state's 'next business day' or 'within X days of acceptance.' Trust money（信托资金）: money belonging to others (e.g. earnest money) a broker must safeguard in a trust account within 3 banking days. (Rule 21 NCAC 58A .0116)

   Handbook: North Carolina Trust Accounts — 3-banking-day deposit deadline (Rule 21 NCAC 58A .0116)

2. A North Carolina broker is short on cash and deposits a client's earnest money into the broker's own personal checking account 'just to hold it.' What has the broker done wrong?

   • Commingled trust money with the broker's own funds by using a personal account — Correct answer
   • Nothing — a broker may use any account as long as the money is returned later
   • Failed to give the earnest money directly to the seller within three days
   • Failed to record the deposit with the register of deeds

   Explanation: Depositing trust money into a personal or general operating account mixes other people's money with the broker's own — that is COMMINGLING, which NCREC rules flatly prohibit. Trust money must go into a separate, designated trust/escrow account, never the broker's personal or business account. Commingling（资金混同）: improperly mixing clients' trust money with the broker's own funds. (Rule 21 NCAC 58A .0116; N.C.G.S. §93A-6)

   Handbook: North Carolina Trust Accounts — Commingling prohibited (Rule 21 NCAC 58A .0116)

3. A North Carolina broker withdraws money from the firm's trust account to pay the broker's own office rent, intending to replace it later. Under NC license law, this act is best described as what?

   • Conversion of trust money — using clients' funds for the broker's own purposes — Correct answer
   • A permissible short-term loan, since the broker plans to repay it
   • Lawful, because office rent is a cost of serving those clients
   • A reportable but lawful withdrawal if disclosed at closing

   Explanation: Using trust money held for others for the broker's own purposes is CONVERSION — a serious violation of §93A-6 that can lead to license revocation and, for a client's direct loss, a claim against the NC Real Estate Education and Recovery Fund. The intent to repay does not cure it. Conversion（挪用/侵占）: a broker's unauthorized use of clients' trust money for the broker's own benefit. (N.C.G.S. §93A-6; Rule 21 NCAC 58A .0116)

   Handbook: North Carolina Trust Accounts — Conversion of trust money prohibited (N.C.G.S. §93A-6; Rule 21 NCAC 58A .0116)