Your text book explains it.

That they are entrusted to hold other's money. Like a Treasurer, honesty & accountability are a must. 

Depending on what state you're in, it's easier on  the office to not have a trust account and let the escrow/tittle company deal with it and keep the real estate company out of possible trouble.

Having one greatly increases your risk of complaints and audits.

It must be kept immaculately balanced using GAAP (generally accepted accounting principles)

You are handling and most likely commingling others' money (your account will hold monies from multiple clients). HOWEVER, It CANNOT be commingled with YOURS, or converted into your funds for any reason.

Unless you absolutely MUST have one (and many states, with technology have the ability now for a tenant to directly pay an owner), it's best to not have a trust account. If you do, make sure yours is compliant with State statute.

Someone has to hold that good faith money that the buyer puts up. Cannot be used for any reason.

See another question that someone posted yesterday about using earnest money.

The escrow account keeps client's deposits in a separate account so the funds are not co-mingled 

Welcome to AR

A great interest earner for the state.

 If you don't know the answer to this one it's a BIG problem COLLEEN MANLEY as it is the very root of our fiduciary responsibilities.

It allows anyone who wants/needs to follow the money......

I wish you all the best with your real estate studies.  Study your textbook. 

If client money is co-mingled with broker/agent money the outcome is often as shown.

 Very important. Come to class tomorrow to learn more.

You need to take great care when handling the funds of others.

TRUST says it all. The funds in a trust account belong to someone else. The trustee is the caretaker of the funds and it is the duty of the trustee to see that the funds are safeguarded and paid to the rightful owner(s).

I'm not at all sure I understand this question. What are you getting at?

In Texas and most other states one is not allowed to co-mingle funds.

intermingling of funds is illegal....

In many states you are not required to have one. Many beokers use a title company or an attorney to hold money on behalf of others.

Ask your real estate commission.

COLLEEN MANLEY to keep the money separate.

Colleen,

It is money held in trust.  Trust is the key word.

We do not have a trust account for our company as we are not property managers. All earnest money funds go directly into escrow upon contract acceptance.

It is where a client's money can be safely stored.  However, the importance has really gone down a lot over the past few years as most brokerages, unless they are conducting property management, rarely use them anymore.

Good luck with your studies.

No idea..