Client/escrow money must be deposited in a trust or escrow account; never commingled with personal funds.
Before you read
Test yourself first: 5 questions
Question 1 of 5
How must a North Carolina broker handle earnest money and other client funds received in a transaction?
Answer: A. License Law requires client funds such as earnest money to be deposited into a trust or escrow account and kept separate from the broker's own funds; commingling is prohibited.
Question 2 of 5
Mixing client trust money with the broker's own operating funds in North Carolina is best described as which prohibited act?
Answer: A. Commingling is the prohibited mixing of client trust funds with the broker's personal or business funds and is a violation of North Carolina License Law.
Question 3 of 5
Which of the following actions by a North Carolina broker would most clearly constitute a license-law violation subject to disciplinary action by the Commission?
Answer: A. Commingling client funds with a broker's own money is prohibited. Earnest money and other trust funds must be deposited into a designated trust or escrow account, not the broker's personal or operating account. The other choices describe proper, required, or recommended practice.
Question 4 of 5
A broker-in-charge fails to properly supervise a provisional broker, who then mishandles trust funds. Under North Carolina law, the broker-in-charge:
Answer: B. A broker-in-charge is responsible for supervising affiliated provisional brokers and for the office's trust account handling, advertising, and recordkeeping. Failure to adequately supervise is itself a disciplinable offense, independent of whether the BIC personally executed the transaction.
Question 5 of 5
A North Carolina broker receives an earnest-money check from a buyer in connection with an accepted offer to purchase. Under Commission rules, by when must the broker deposit these trust funds into a trust or escrow account?
Answer: A. NCREC rules require that trust money, including earnest-money deposits, be deposited into the broker's trust or escrow account no later than three banking days following acceptance of the offer to purchase. Holding funds longer or releasing the timing to another party's discretion violates the trust-account rules.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Sellers of most residential property must give the Residential Property and Owners' Association Disclosure Statement.
- The disclosure statement is provided before the buyer makes an offer.
- Client/escrow money must be deposited in a trust or escrow account; never commingled with personal funds.
- Only the BIC (or an authorized broker) handles and accounts for trust funds.
- Prelicensing = 75 hours; Postlicensing = 90 hours (three 30-hour courses).
- North Carolina is NOT a community property state (equitable distribution).
- Common timeline: 'Working with Real Estate Agents' disclosure at first substantial contact.
North Carolina Disclosures, Trust Funds & Key Numbers Cheat Sheet: FAQs
Is North Carolina Disclosures, Trust Funds & Key Numbers Cheat Sheet on the real estate exam?
Yes. State License Law is a scored domain on the North Carolina 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 North Carolina test this differently?
North Carolina applies its own license law on top of the national portion. This page covers the North Carolina rules specifically, which is what the state section of your exam tests.
