Question

An agent is putting both his funds from property management and his residential sales in the same trust account. This is okay if:

Selections

A. Broker has a real estate securities permit

B. A separate record is kept for each

C. It is less than $30,000 in the trust account

D. Broker has a fidelity bond to cover the maximum amount

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Answer: B

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5 Keys Summary

• Trust funds received by a broker, including residential sales deposits and property management rents, must be placed into a neutral escrow, delivered to the owner, or deposited into a broker’s trust account within three business days of receipt.

• The illegal act of commingling, which is mixing a client’s trust funds with the broker’s personal or general funds, is strictly prohibited and can lead to the suspension or revocation of a real estate license.

• A broker is permitted to use a single trust account to hold funds collected from different activities, such as property management and earnest money deposits from sales transactions.

• This practice is acceptable if and only if the broker maintains separate, meticulous records for each individual beneficiary or transaction within that single trust account.

• Maintaining these separate records allows the broker to perform a monthly reconciliation to ensure the trust account balance equals the total liability owed to all clients.

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