Which statement accurately describes deposits and trust accounts for auto brokers?

• A. They may be placed in the dealer's personal savings account
• B. They must be kept in a separate trust account
• C. They must be kept in the dealer's business checking account
• D. They can be kept in any account chosen by the broker

Answer: (B)

Deposits and trust funds must be kept in a separate trust account. This separation protects buyers by ensuring their money isn’t mixed with the broker’s own funds or operating capital. When a broker collects earnest money or a down payment, that money should be held in a dedicated trust account so there’s a clear, auditable record of exactly who owns each dollar and when it will be released or returned. Regulators require this to prevent commingling and to maintain accountability for customer funds.

Keep in mind that funds in a trust account are not used for the broker’s expenses; they stay dedicated to the transaction unless released per the agreement. Proper records should track every deposit—date, amount, and source—and regular reconciliations should be performed. The other options would mix funds with personal or business money or allow the broker to choose any account, which undermines safety and regulatory compliance.