An agency/sales disclosure must be given to consumers.
Before you read
Test yourself first: 5 questions
Question 1 of 5
An Indiana broker receives an earnest money deposit on behalf of a buyer. How must these funds be handled?
Answer: C. Trust/escrow funds such as earnest money must be deposited into the brokerage's designated trust account and kept separate from the company's operating funds. Commingling with personal or operating money is prohibited.
Question 2 of 5
An Indiana broker deposits an earnest money check into the broker's personal checking account rather than the firm's trust (escrow) account. This conduct is BEST described as:
Answer: B. Mixing client or third-party funds (such as earnest money) with the licensee's own money is commingling, a prohibited practice that can result in disciplinary action by the Indiana Real Estate Commission. Earnest money belongs to the parties to the transaction, not the broker, until properly disbursed, so depositing it into a personal account is improper regardless of intent to repay it.
Question 3 of 5
Which of the following actions by an Indiana licensee would MOST likely be grounds for disciplinary action by the Real Estate Commission?
Answer: C. Paying compensation or referral fees for licensed real estate activity to an unlicensed person is prohibited and is grounds for discipline. Presenting all offers, disclosing material defects, and segregating trust funds in escrow are all required, proper practices, not violations.
Question 4 of 5
When an Indiana broker receives an earnest-money deposit on behalf of a client, where must those funds be held?
Answer: B. Indiana requires that earnest money and other client funds be deposited into a separate trust or escrow account that the managing broker is responsible for maintaining. Mixing client funds with the broker's personal or general operating money is prohibited.
Question 5 of 5
An Indiana broker uses earnest money held in escrow to temporarily cover the firm's payroll, intending to replace it before closing. This act is BEST described as:
Answer: B. Using client trust funds for the broker's own purposes is conversion, the misappropriation of money belonging to another. It is a serious violation regardless of intent to repay and is grounds for license discipline by the Commission.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Sellers of residential property generally must provide a written seller's residential real estate disclosure form.
- Federal lead-based paint disclosure applies to homes built before 1978.
- An agency/sales disclosure must be given to consumers.
- Client and escrow (trust) funds must be kept separate from the broker's own money — no commingling.
- Trust/escrow funds are held by the managing broker's firm and disbursed per the agreement.
- Pre-license education: 90 hours.
- License type to remember: entry-level agents are 'brokers,' supervised by a managing broker.
- Keep accurate records and account promptly for funds received on behalf of clients.
Indiana Disclosures, Escrow/Trust Funds & Key Numbers: FAQs
Is Indiana Disclosures, Escrow/Trust Funds & Key Numbers on the real estate exam?
Yes. State License Law is a scored domain on the Indiana real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does Indiana test this differently?
Indiana applies its own license law on top of the national portion. This page covers the Indiana rules specifically, which is what the state section of your exam tests.
