Real Estate Chapter 26
It's common for a sponsoring broker to be required to keep all escrow records for
3-5 years.
Sponsoring Broker Jones received an order from a court of competent jurisdiction directing the disbursement of the escrow moneys. What action should broker Jones take?
Broker Jones must disburse the escrow moneys according to the terms of the order.
Which of the following statements is TRUE?
Earnest money is not required for a contract to be valid.
What happens to escrow monies when the parties are unable to reach a resolution?
Funds are held in a State escrow account for six months and then tuned over to the General Revenue Account.
Buyer Jim put down a deposit in the form of a boat title worth $5,000. The boat is owned by Jim's parents. The transaction was not completed, who should the boat title be returned to?
Jim
What document is used to show the chronological sequence in which funds are received and disbursed by the sponsoring broker?
Journal
Where would you find every escrow entry showing the running balance after each receipt or disbursement?
Journal
Where would you find the names of all parties to a transaction, the amount of escrow funds the sponsoring broker received, and the date the broker received the funds?
Ledger
What is the log that identifies all escrow bank account numbers and the name and address of the bank where the escrow accounts are located?
Master Escrow Account Log
Under what conditions might a broker hold an authorized disbursement of escrow moneys claim?
Never
What is the legal requirement regarding the number of escrow accounts that can be opened?
No limit
Which of the following statements best describes an authorized disbursement?
One which is made on behalf of, and at the written direction of, all principals to the transaction or their duly authorized agents
Which of the following statements is TRUE regarding earnest money?
Personal property can be offered as an earnest deposit.
Who holds the escrow money when a dispute occurs?
The sponsoring broker
Broker John received three earnest money checks on Friday. The upcoming Monday is a holiday. When is broker John required to make an escrow deposit?
Tuesday
When must an escrow account be interest bearing?
When all parties make the request
Most states require that the broker make available to the real estate licensing agency
all escrow records and related documents.
Most states require that the sponsoring broker reconcile an escrow account
all escrow records and related documents.
Most states require that the sponsoring broker reconcile an escrow account
based on a monthly bank statement.
Earnest money is usually made in the form of a
check
All non-interest bearing escrow accounts
must be maintained at a federally-insured depository.
Brokers who are responsible for earnest money deposits for property sales (and security deposits for leases)
must open special trust (or escrow) accounts in which to deposit the funds they have been given.
If any dispute between the parties arises regarding the deposited escrow money, the sponsoring broker should
not release the money without a written release from both parties or both parties' duly authorized agents (power of attorney or attorney at law).
Buyer Norm had his father put up earnest money in the amount of $4,000. The contract fell through. The sponsoring broker should
release the full amount back to buyer Norm.
All licensees should give earnest money checks to their sponsoring broker immediately who must deposit said earnest money by
the next business day of contract acceptance.
