New York Law (NYLE) Practice Exam 2026 - Free NYLE Practice Questions and Study Guide

A lawyer who receives a deposit on a real estate contract is required to deposit the funds into a designated attorney trust account. This is a specific type of account that ensures the proper handling of client funds, maintaining client protection and compliance with ethical obligations.

When a lawyer receives a deposit, it is considered client property, and the law mandates that they must safeguard these funds until they are meant to be disbursed. Using a trust account helps to prevent any commingling of personal or business funds, which is crucial for maintaining professional standards and protecting client interests. This accounting practice is essential for transparency and ensuring that the lawyer is adhering to legal and ethical standards in managing client funds.

Alternative options, such as depositing the funds into a personal bank account or a separate business account, do not align with the requirements outlined by New York Law regarding trust accounts for client funds. Additionally, while returning the deposit to the buyer upon request might seem appropriate in some situations, it does not meet the requirement that the lawyer must maintain those funds properly in a trust account until either the transaction is completed, or the funds must be disbursed according to the terms of the contract.