Which statement about Kentucky escrow accounts is true?

In Kentucky, every principal broker is required to have an escrow account to manage client funds appropriately. This requirement ensures that all earnest money and other client funds are kept separate from the broker's personal or business funds, safeguarding the interests of clients and facilitating transparency in transactions.

The regulation surrounding escrow accounts is designed to protect buyers and sellers by ensuring that these funds are securely held until the agreed-upon terms of a transaction are fulfilled. Escrow accounts also serve a critical role in maintaining trust in real estate transactions, as they provide a clear method for handling funds before closing.

The other statements are not aligned with Kentucky law regarding escrow accounts. The requirement for every principal broker to maintain an escrow account reflects the importance the state places on accountability and financial integrity within real estate practices.