California: Real Estate Principles - Chapter 24

7 of 10 - Which of the following statements concerning California Trust Account Requirements is false? A. A trust account may be an interest-bearing account. B. A salesperson, licensed to the broker, may, under certain conditions, make a withdrawal from the broker's trust account. C. An out-of-state trust account is permitted under certain conditions. D. Both A and C

A. A trust account may be an interest-bearing account.

5 of 10 - Jason, a broker, has been accused of conversion. His partner, Justin, has been accused of commingling. Which has been accused of a more serious offense? A. Jason, conversion is considered a much more serious violation than commingling and has heavy criminal penalties. B. Justin, commingling is considered a much more serious violation than conversion and has heavy criminal penalties. C. Both Jason and Justin have been accused of very serious crimes and it will be up to the court system to decide who has committed a more serious offense. D. None of the Above.

A. Jason, conversion is considered a much more serious violation than commingling and has heavy criminal penalties.

2 of 10 - When a buyer hands over earnest deposit money to a salesperson licensed to a broker, or to the broker themselves, what type of relationship does this create? A. A Client Relationship, with the broker obligated to give full disclosure to the funds' owners. B. A Fiduciary Relationship with the broker having a fiduciary responsibility to the funds' owners. C. A Buyer Relationship with the broker obligated to give full disclosure to the funds' owners. D. Both A and C

B. A Fiduciary Relationship with the broker having a fiduciary responsibility to the funds' owners.

4 of 10 - The McColls have made an offer on a new home. The home is new construction and scheduled to be completed by the end of the year. They provide a purchase deposit--a check in the amount of $40,000--to their agent, Suzette. Suzette, at the broker's direction, deposits the earnest money in the broker's trust fund account within two business days of receipt of the funds. Did Suzette follow the proper procedures? A. No, the check should not have been cashed. If a check is used as an earnest money deposit, it is to be held until acceptance of the offer. The seller must also be informed the buyer's check is being held and not negotiated. B. Yes, Suzette deposited the earnest money in the broker's trust fund account as directed. She also deposited the check within three business days of receipt. Unless there were written instructions to hold the check until acceptance of the offer, the check may be cashed. C. No, Suzette needed to deposit the earnest money in the broker's trust fund account within two days of receipt, not necessarily two business days. D. Both A and C

B. Yes, Suzette deposited the earnest money in the broker's trust fund account as directed. She also deposited the check within three business days of receipt. Unless there were written instructions to hold the check until acceptance of the offer, the check may be cashed.

6 of 10 - Jamison, a broker, has been fined $10,000 and is being sentenced to four months' prison time for violations he has committed through his brokerage. Which type of violation did he possibly commit? A. Commingling B. Restitution C. Advance Fees for a Loan secured by Lien on Real Property D. Account Fraud

C. Advance Fees for a Loan secured by Lien on Real Property

1 of 10 - Miriam is a real estate salesperson. She has just been handed a $100,000 earnest money deposit certified check from buyers who are interested in a new home. What does she do with the money? A. Miriam must turn the money over to the broker listing the home the buyers are interested in purchasing. The broker may then deposit the funds in the broker's trust account. B. Miriam must hand the check over to her own broker. At that point, the broker might direct her to put the funds into the hands of the broker's principal; hand the funds over to another broker involved in the transaction; or place the funds into the broker's bank account. C. Miriam must hand over the check to only her own broker. At that point, the broker might direct her to put the funds into the hands of the broker's principal; place the funds into a neutral escrow depository; or deposit the funds into the broker's trust fund bank account. D. Miriam must simply deposit the check into the broker's account within three business days of receipt of funds. She need not consult her broker on procedure, only follow the trust fund regulations.

C. Miriam must hand over the check to only her own broker. At that point, the broker might direct her to put the funds into the hands of the broker's principal; place the funds into a neutral escrow depository; or deposit the funds into the broker's trust fund bank account.

8 of 10 - Matilda is buying a condo from Tom and Alex Ries. She has given her agent, Manuel, earnest deposit funds in the amount of $10,000. Matilda has post-dated the check to coincide with the expiration date of offer acceptance on the contract. Do the basic trust fund regulations apply to Matilda's earnest deposit? A. Yes, handling a post-dated check should be the same as a check with written instructions to be cashed upon offer acceptance. All of the basic regulations apply to the post-dated check. B. No, a post-dated check is illegal tender in the state of California and may result in the mischaracterization of the form of earnest deposit money made by the buyer. C. No, California law has held that post-dated checks are the equivalent of a promissory note and are non-negotiable. The broker must not accept a post-dated check from a buyer without adequate disclosure to the seller. D. Yes, a post-dated check should be treated the same as a promissory note. As long as the seller has full disclosure, the basic regulations of trust funds apply to the post-dated check.

C. No, California law has held that post-dated checks are the equivalent of a promissory note and are non-negotiable. The broker must not accept a post-dated check from a buyer without adequate disclosure to the seller.

3 of 10 - Ramon, a salesperson licensed to Richard, a broker, has been given specific written authorization to make a withdrawal from the broker's trust account. Ramon is uncertain this is permissible under California Law. Which California Law, if any, references Ramon's concern? A. California Business and Professions Code Section 10145 B. Commissioner's Regulation 2832 C. California Business and Professions Code Section 10085.5 D. Both A and B

D. Both A and B

9 of 10 - Serena and Lucy want to make an offer on their dream home. The seller is requesting a very large earnest money deposit with serious offers on the home. Serena and Lucy have some cash set aside for this purpose, but are short of the amount the sellers are requesting. Do they have any other options? A. Cash is the only acceptable trust fund item accepted by brokers. B. A check made payable to the broker or to an escrow or title company is an option. C. A personal note made payable to the seller or a pink slip on an automobile given as a deposit is acceptable. D. Both B and C

D. Both B and C

10 of 10 - Jackson, a broker, is accused of commingling his money with trust account funds. His broker's trust account is a non-interest-bearing account. The current balance of the trust account is $430,000. The earnest deposit funds portion of the account totals $415,000; the broker's initial deposit totals $15,000. Is Jackson guilty of commingling? A. No, he can clearly show through well-kept records his initial deposit of $15,000 and the trust fund money of $430,000. He is not earning interest from any part of this account, including his initial deposit of personal funds. B. Yes, he should not have any money of his own ever mixed with clients' earnest money deposits. C. Yes, Jackson's initial deposit to open the account should have only totaled about $1,000. The $15,000 he deposited of his own money to open the account is considered excessive. D. Yes, Jackson's initial deposit to open the account should have only totaled about $200.00. The $15,000 he deposited of his own money to open the account is considered excessive.

D. Yes, Jackson's initial deposit to open the account should have only totaled about $200.00. The $15,000 he deposited of his own money to open the account is considered excessive.