Which type of money is considered to be "trust money" in real estate transactions?

In real estate transactions, "trust money" typically refers to funds that are held in a fiduciary capacity. This is money that a broker or agent receives from a buyer or seller for the purpose of facilitating a transaction, and it must be handled with a high degree of care due to the trust placed in the agent by the clients.

Collected earnest money is specifically designated as a good faith deposit made by a buyer to show their intention to purchase a property. This earnest money is typically held in a trust account until the transaction is finalized or until certain conditions are met, such as completing due diligence or negotiating the final terms. It demonstrates commitment to the purchase, and since it is held by the agent or broker on behalf of the buyer, it fits the definition of trust money.

Down payments are also critical in a real estate transaction, but they are typically funds that are paid directly towards the purchase price of the home and are not held in trust in the same way. Cancellation fees and monthly management fees represent payments for services rather than being held in trust for the benefit of either party involved in a transaction. Therefore, collected earnest money is unequivocally the correct choice as it directly corresponds to funds held in a fiduciary capacity within real estate practices.