Real Estate

TEST 24

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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?
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.
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.
 
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.
 
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.
You answered incorrectly
Salespersons must immediately give all received earnest monies to their employing broker. The broker may then deposit the funds or have Miriam deposit the funds into the broker's trust fund account, deposit it into a neutral escrow depository, or give the money to the principal to the transaction.
2 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?
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.
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.
 
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.
 
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.
You answered incorrectly
According to California law, a post-dated check is not cashable and is, therefore, a promissory note. If the broker accepts a promissory note, he must make full disclosure to the seller at the time the offer and promissory note are presented to him and must record a receipt of the post-dated check in his trust fund records and hold the check in a safe place.
3 of 10 - Which of the following statements concerning California Trust Account Requirements is false?
 
A trust account may be an interest-bearing account.
A salesperson, licensed to the broker, may, under certain conditions, make a withdrawal from the broker's trust account.
An out-of-state trust account is permitted under certain conditions.
Both A and C
You answered correctly
4 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?
 
Commingling
Restitution
 
Advance Fees for a Loan secured by Lien on Real Property
Account Fraud
You answered incorrectly
Under Section 10085.5 of California Code, Advance Fees for a Loan Secured by Lien on Real Property, it is illegal for anyone to claim, demand, charge, collect, or contract for an advance fee for soliciting lenders on behalf of borrowers before the borrower becomes obligated to complete the loan. Violating this regulation may result in a maximum $10,000 fine, up to 6 months in prison, or both.
5 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 Client Relationship, with the broker obligated to give full disclosure to the funds' owners.
 
A Fiduciary Relationship with the broker having a fiduciary responsibility to the funds' owners.
 
A Buyer Relationship with the broker obligated to give full disclosure to the funds' owners.
Both A and C
You answered incorrectly
When trust funds are received by a broker, the funds are handled on the behalf of others, which creates a fiduciary relationship and fiduciary responsibility to the funds' owners.
6 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?
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.
 
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.
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.
Both A and C
You answered correctly
7 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?
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.
 
Yes, he should not have any money of his own ever mixed with clients' earnest money deposits.
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.
 
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.
You answered incorrectly
When a broker initially opens a trust account, he needs to deposit a small amount to open the account, usually about $200 and is the only personal money the broker may deposit into the account. If the Commissioner audits the account and sees either commingling or conversion of trust funds in excess of $10,000, the court may issue an order to restrain the broker from further mishandling of trust funds and from practicing real estate.
8 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?
 
Jason, conversion is considered a much more serious violation than commingling and has heavy criminal penalties.
Justin, commingling is considered a much more serious violation than conversion and has heavy criminal penalties.
 
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.
None of the Above.
You answered incorrectly
While both commingling and conversion are illegal, conversion is a much more serious violation than commingling and has serious criminal penalties.
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?
Cash is the only acceptable trust fund item accepted by brokers.
A check made payable to the broker or to an escrow or title company is an option.
A personal note made payable to the seller or a pink slip on an automobile given as a deposit is acceptable.
 
Both B and C
You answered correctly
10 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?
 
California Business and Professions Code Section 10145
Commissioner's Regulation 2832
California Business and Professions Code Section 10085.5
 
Both A and B
You answered incorrectly
Under California Business and Professions Code Section 10145 and the Commissioner's Regulation 2832, a withdrawal may only be made from a trust account upon the signature of the broker or a salesperson licensed to the broker with written authorization by the broker.

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