Deposit received as stakeholder on exchange is client money (rule 2.1(b))

Rule 2.1 of the SRA Accounts Rules defines client money to include money held or received by the firm 'on behalf of a third party in relation to regulated services delivered by you (such as money held as agent, stakeholder or held to the sender's order)'. A deposit received on exchange to be held as stakeholder is therefore client money. Under rule 2.3 the firm must ensure it is paid promptly into a client account, and rule 4.1 requires it to be kept separate from the firm's own money. As stakeholder, the firm holds the deposit for both parties and may release it only when the contract allows, usually to the seller on completion. It cannot simply pay it to Danuta on her instructions before then, because it is not held solely for her.

Why A is wrong: Stakeholder money is expressly client money under rule 2.1(b); it never belongs to the firm.

Why B is wrong: A stakeholder holds for both parties and must not release the deposit to the seller before the contract entitles her to it.

Why D is wrong: Rule 2.3 requires client money, including stakeholder money, to be paid promptly into a client account; none of the exceptions applies.

Why E is wrong: The Rules require client money to be held in the firm's client account; there is no requirement to use an account in the buyer's name.