Arkansas Real Estate Practice Exam

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.