question

On what time basis must trust accounts be reconciled:

answer

monthly

question

If a friend asks you to help manage a property for a fee, would you put the deposits into your escrow account or your employing brokers escrow account?

answer

Deposit them into your employing brokers escrow account

question

Broker B received a buyer's earnest money check for $5,000 and immediately cashed it. At closing, the broker handed the seller a personal check drawn on the broker's own bank account for $5300, representing the original earnest money plus six percent interest. The broker

answer

should have deposited the money in a bank escrow or trust account and should have discussed the interest with the parties.

question

If there is a dispute regarding earnest money

answer

The broker has a choice to interplead the money or await written instructions from the parties

question

A broker must keep:

answer

all transaction files for four years

question

You receive an offer with an earnest money check. The seller counters the offer.

answer

you send the earnest money check back to the buyer's broker with the counter offer

question

To account for money belonging to others, the broker must maintain:

answer

the escrow bank account, the cash journal, the transaction ledgers, the broker's ledger card, monthly bank reconciliation, and proper transaction files

question

How much personal funds can you keep in the escrow account?

answer

Only enough to maintain the account

question

All earnest money received by a broker on behalf of his or her principle must be deposited in an escrow account within

answer

Three business days after the broker learns of acceptance of the offer

question

The broker received earnest money deposit from a buyer. Under Colorado law, the broker should

answer

hold the earnest money deposit in a secure place in the brokers real estate brokerage office until the offer is accepted

question

Broker B received a buyers earnest money check for $5000 and immediately cashed it. At closing, the broker handed the seller s personal check drawn by the brokers own bank for the amount of $5300, representing the original earnest money plus six percent interest. The broker

answer

Should have deposited the money in a bank escrow or trust account and should have discussed the interest with the parties

question

A broker manages three properties for the same owner. One property is in need of emergency repairs, but the owner does not have enough money in the management account to cover the cost. The broker uses excess funds from the account for the emergency then replaces funds later with a check from the owner. Which of the following is true?

answer

The broker is in violation of regulations for improperly handling escrow funds

question

Which of the following types of escrow accounts must a broker keep if appropriate to the type of business he does?

answer

Sales, Management, and Security Deposit trust accounts

question

In each of the trust accounts, the broker must do or is able to do which of the following?

answer

be able to withdraw money from the account and may authorize others to withdraw funds

question

Which of the following is true of trust accounts?

answer

Normally a separate trust account shall not be used as a depository for monies belonging to employed licenses

question

Monies belonging to others that need to be placed in trust accounts includes which of the following?

answer

Monies received for partnerships

question

When a check is received as earnest money, the regulations require

answer

It may be withheld from presentment only if so disclosed in the contract or by written instruction of the seller.

question

When a broker acting as a property manager receives a security deposit from a tenant which of the following is true?

answer

Security Deposits received must be deposited within 5 business days into the escrow account

question

Which of the following records must a broker maintain in connection with escrow accounts?

answer

an account journal, a ledger, a bank reconciliation worksheet

question

If the broker prepares instruments pertaining to the consummation of the sales, leasing or purchase of real estate, he or she must do which of the following?

answer

The broker shall retain copies of these documents in his or her files

question

All of the following must be in compliance with a broker's escrow or trust account EXCEPT

answer

by having only the broker authorized to withdraw funds.

question

What shows all deposits and payments to and from a brokers escrow account in chronological order?

answer

Account Journal

question

A brokers keeps one or more escrow or trust accounts in order to

answer

Segregate funds belonging to others from brokerage operating funds

question

In a transaction with a listing broker and a Buyer Agent Broker, who holds the earnest money deposit?

answer

Listing Broker

question

May a property manager have a single escrow account for several properties and several owners?

answer

Yes, but the manager must not let any owner's balance go below zero.

question

In connection with property management activities, security deposits

answer

should be held in a separate, security deposit trust account by the property manager

question

A brokers trust account at a well financed credit union

answer

does not offer the proper insurance protection to the account beneficiaries

question

The Colorado Real Estate Commission may audit a broker's files

answer

At any time, without notice

question

When must an Independent Broker first open a trust account?

answer

When the broker first receives earnest money to deposit

question

If a broker has an interest-bearing trust account, the interest

answer

may accrue to a nonprofit affordable housing fund

question

When must a listing broker deposit an earnest money check?

answer

Not later than three business days after learning of acceptance of the offer

question

The listing contract is preserved in whose transaction files?

answer

Listing broker only

question

If an earnest money check is not honored by the buyers bank, the broker should

answer

Notify the sellers and ask what they should do next

question

The account _____________ is a chronological summary of the cash receipts and disbursements made by the broker which affects the cash balance of the escrow account

answer

ledger

question

After the closing of a transaction, the balance on the owner ledger card should be

answer

zero

question

The Employing Broker should pay his salespeople's commissions from:

answer

The business operating account

question

The broker must maintain a separate file for each property in which he is participating under a lease, purchase, sale, or exchange of real property. This file must be kept for:

answer

four years

question

Earnest money received by a listing broker must be:

answer

deposited in the sales trust account no later than the third business day following the acceptance of the contract

question

The R.E. Commission recommended "Notice of Escrow/Trust Account" should be

answer

signed by a bank officer and retain the brokers files. The bank officer may also keep a copy.

question

With regard to funds belonging to the broker in an escrow or trust account:

answer

a separate ledger card will keep track of these funds

question

A note accepted by the seller as earnest money must be:

answer

held by the listing broker and presented for payment according to its terms

question

A broker is managing 15 properties. Two belong to the broker, three are in partnership in which the broker has an ownership interest and the rest are pure management for third parties. What is the minimum number of management accounts this broker must maintain?

answer

two. A broker does not have to have a separate trust account for properties that are wholly owned by the broker or blood relatives.

question

Whose truncation file would include a copy of the Seller's Property Disclosure?

answer

Listing and selling brokers

question

"Good Funds" could include all EXCEPT:

answer

A check on a brokers trust account because they cannot be immediately cashed for funds.

question

Which is NOT commingling of trust funds?

answer

broker pays a repair bill from a management account reducing the clients ledger balance to zero. The broker may pay the bill but must write it on the ledger statement or have verification that it is an acceptable expense to be paid. Owner ledger cannot go lower then zero.

question

Deposits and advance payments for short term occupancy agreements such as condominium rentals:

answer

must be in a trust account if held by a licensed brokerage entity

question

Which is true of the signers for a brokerage trust account?

answer

The broker must be able to withdraw funds without a co-signer

question

If a broker establishes an account to hold money belonging to others, which of the following is correct?

answer

All checks, deposit slips, and bank statements must include the word "escrow" or "trust" as part of the account name.

question

A broker managing how many properties must maintain a property management trust account?

answer

7 The law requires that a broker managing seven or more properties must have a property management trust account.

question

Once a contract to purchase has been accepted by the seller, when does the earnest money tendered with the contract need to be deposited into the appropriate escrow account?

answer

3 business days after notice of acceptance

question

If a broker has an interest-bearing trust account, the:

answer

interest may accrue to a nonprofit affordable housing fund

question

If there is a dispute regarding earnest money:

answer

The broker has a choice to interplead the money or await written instructions from the parties

question

An escrow trust account:

answer

Is a separate account established to hold money belonging to others

question

Money belonging to others best describes:

answer

money a broker would keep in a trust or escrow account

question

What must appear in the title of a trust account?

answer

Company name and employing broker's name

question

How long must transaction records be maintained by an independent broker?

answer

minimum of four years

question

Which of the following is correct concerning a broker's establishment of an account to hold money belonging to others?

answer

All checks, deposit slips and bank statements must include the word "escrow" or "trust" as part of the account name

question

A broker received an earnest money deposit from a buyer. Under Colorado law, the broker should

answer

hold the earnest money deposit in a secure place in the broker's real estate brokerage office until the offer is accepted.

question

What shows all deposits and payments to and from a broker's escrow account in chronological order?

answer

Account Journal

question

The illegal act of a real estate broker who places his client's or customer's funds with his own funds is known as:

answer

commingling

question

Bank reconciliation of a trust account:

answer

Must be done any month in which the account has had activity

question

When brokers receive earnest money, the money must be:

answer

Deposited into the broker's trust account

question

A brokerage firm holding 4 earnest money deposits, and 15 security deposits for managed single-family residences must have a minimum of how many trust accounts?

answer

3 Rule E-1 (h) A broker who manages less than 7 single-family residences may deposit rental receipts and security deposits and disburse money collected for such purposes in the "sales escrow" account" Elsewise, you need one escrow account for earnest money, one for rental receipts and one for rental deposits.

question

A broker writes checks from the trust account into his operating account.

answer

broker is commingling and could have is license revoked

question

Money received by a property manager must be deposited within __________ days and money received as earnest money in a real estate transaction must be deposited within __________ days after contracted has been accepted.

answer

5,3

question

Reconciliation refers to:

answer

monthly review and comparison of the bank statement with your records

question

Trust Account journal and ledger documentation of disbursements from trust accounts need NOT include:

answer

Name of the person who wrote the check out of the account

question

Money belonging to others is kept separate from other accounts:

answer

to prevent commingling with your own funds

question

When must an employing broker keep a ledger?

answer

When accepting money belonging to others

question

In the absence of language to the contrary in the Property Managment Agreement a property manager must:

answer

Deposit security deposit into escrow account

question

What should you do if a buyer shows up at your office at 1:00 PM with a personal check for the closing funds for a closing scheduled at 2:0 PM?

answer

Take the buyer to the bank to get a cashier's check

question

Good funds would be:

answer

cashier's checks, certified checks, or wire transfers

question

Who holds the earnest money in a transaction with a listing broker and a buyer's agent?

answer

Listing Broker

question

If managing a property and holding security deposits, brokers a. can withhold money from the deposit if there is damage and it is accounted for to the tenant b. are not permitted to hold tenant security deposits because their management contract is with the property owner and not the tenant c. may withhold for normal wear and tear for any lease over a year d. must refund the full deposit to the tenant within 30 days after the tenant vacates

answer

a

question

If a broker is acting in good faith but fails to remove his earned commission from the trust account for ten business days after closing the transaction a. this is an example of commingling b. is a typical business practice in busy offices c. this is permitted if the person who must co-sign the check has not been available d. the broker cannot remove money from the trust account without his client's authorization

answer

a

question

If the buyer notifies the seller in writing of a termination of the contract under the inspection provision, what happens to the earnest money? a. the broker must hold it until she gets mutual agreement to return it to the buyer b. the buyer and seller must mediate this disagreement about earnest money c. the broker must immediately return the money to the buyer d. because the buyer did not properly inspect the property during the showing, the money goes to the seller

answer

c

question

Which of the following would MOST likely contain Social Security or tax ID numbers of the parties? a. ledger b. signature card c. broker card d. journal

answer

a

question

A trust account a. is a separate account established to hold money belonging to others b. is a good place to put employee withholding for payroll taxes c. should have the words "operating account" in its account identification d. may not contain any broker funds

answer

a

question

Trust accounts would be used for all the following purposes EXCEPT a. setting aside money belonging to others separate from a brokerage operating funds b. holding funds for employees of the firm c. providing a place to hold money on behalf of others pending closings d. ensuring the public is generally protected in the event the brokerage assets are attached under the terms of a court action

answer

b

question

An employing broker is a partner in the ownership of an apartment building and is acting as property manager. The broker a. must maintain a separate ledger in her regular management account b. needs no trust account because she is the owner c. must maintain a separate trust account for this property d. cannot manage a property in which she has an interest

answer

c

question

Following closing, an employing broker should pay commission due to broker associates a. after withholding independent contractor taxes and contributions b. from the company operating account according to employment agreements c. from the trust account at the end of the accounting period d. immediately from the trust account to close the ledger at zero

answer

b

question

The method identifies the specific details regarding a particular party or parties whose money is held in a trust account is the use of a. broker file system b. transaction file system c. account journal entry system d. ledger card system

answer

d

question

If a buyer terminates the contract as permitted, the brokerage holding the earnest money a. must return the earnest money to the buyer immediately b. should interplead the funds to the nearest court c. cannot refund the money to the buyer d. is permitted to require signed releases from all parties prior to releasing the earnest money

answer

a

question

All of the following are examples of commingling of trust funds EXCEPT a. funds of a property partially owned by the broker in the regular management account b. funds for employee benefits payments held in the trust account c. a broker fails to withdraw earned commissions for a two month period d. a broker pays a repair bill from a management account reducing the owner's ledger balance to zero

answer

d

question

Whose transaction file would include a copy of the Seller's Property Disclosure form? a. selling broker only b. listing broker only c. listing and selling brokers d. does not need to be retained beyond closing

answer

c

question

Which is TRUE of the signers for a brokerage trust account? a. the broker must be able to withdraw funds without a cosigner b. all checks must have two signatures c. all signers must be individually bonded d. no unlicensed person may sign the checks

answer

a

question

Bank reconciliation of a trust account a. help prevent bank errors b. should be done annually by a CPA c. must be done in any month with account activity d. is a good safeguard but is not required

answer

c

question

A standard lease with no extension gives the broker how many days to return a tenant's security deposit? a. 45 b. 30 c. 60 d. 90

answer

b

question

The account that would contain a record of all the broker's trust records and trust accounts in the a. journal b. broker c. bank d. ledger

answer

a

question

The employing broker records an earnest money deposit a. on the transaction ledger and the trust account journal b. only on the deposit slip stub c. in the trust account journal d. on the transaction ledger

answer

a

question

An employing broker managing a property in which the broker has an ownership interest must a. not manage other properties b. keep the funds in the sales trust account c. have a separate account for this property d. make sure all the other owners know the funds are in the management account

answer

c

question

A property manager must deposit rents collected a. in a timely manner b. into the appropriate trust account not later than three business days after receipt c. in an operations account until the check clears d. in a trust account not later than five business days after receipt of the money

answer

d

question

An outside audit of a broker's trust accounts a. is required annually of all brokers b. will prevent employee dishonesty c. will be done annually by Real Estate Commission staff d. is an excellent safeguard against improper or fraudulent bookkeeping

answer

d

question

The employing broker should pay his broker associates commissions from which account? a. sales trust b. management c. operations d. earnest money trust

answer

c

question

A chronological summary of the cash receipts and disbursements made by the broker, which affect the cash balance of trust account, is the account a. property file b. ledger c. journal d. management file

answer

c

question

If a promissory note cannot be redeemed according to the terms of the contract, the a. listing broker must honor the promissory note and pay the amount of the earnest money from the brokerage trust account b. title company holding the promissory note will file the appropriate legal papers to collect the money through the courts c. buyer's broker is responsible to collect the funds from the buyer d. listing broker must inform the seller and attempt to collect the money from the buyer

answer

d

question

In the event a dispute arises between a seller and a buyer regarding the earnest money, the broker a. must return the earnest money to the buyer immediately b. should notify the Real Estate Commission c. must disburse the earnest money to the seller d. has the option to interplead the earnest money to a court

answer

d

question

Broker associate commission are paid a. by the title company if the company conducts the closing b. monthly after the bank records are reconciled c. by the employing broker from the operations or other nontrust account d. from the trust account if the employing broker closes the transaction

answer

c

question

What records must the brokerage firm retain for four years? a. all records generated in the firm b. transaction files c. independent contractor agreements d. showing files

answer

b

question

The Real Estate Commission has the authority to audit a broker's files a. at any time b. only if written notification is received by the broker at least 24 hours in advance c. only if the broker has received verbal notification at least 24 hours in advance d. only after receipt of a verified written complaint

answer

a

question

A commercial broker is holding a $100,000 earnest money deposit on a large sale, which will close in six months. Which of the following statements is TRUE? a. the broker may deposit the funds in a certificate of deposit and keep the interest b. the funds must be in the broker's regular sales escrow account c. any interest earned automatically goes to the seller d. the parties may agree to an interest-bearing account and agree who will get the interest

answer

d

question

An earnest money check submitted with an offer must be a. deposited not later than the third business day following notice of acceptance of the offer b. deposited within 24 hours after receipt by the selling broker c. a cashier's check or similar good funds d. held by the buyer's broker

answer

a

question

Harry was the sole proprietor of ZYX Realty for three years and has just joined ABC Realty. The person responsible for maintaining the records of ZYX is a. the employing broker of ABC b. the Real Estate Commission c. Harry for four years d. Harry and his new employing broker

answer

d

question

A brokerage is holding earnest money for two pending sales. The brokerage is also holding security deposits and rents for eight properties. How many trust accounts must that broker have? a. all money held for others can be held in a single trust account with proper accounting and audit control b. this broker would be required to have three trust accounts c. brokers are only required to have two trust accounts: one for real estate brokerage and one for property management d. real estate brokers cannot manage more than six properties if they are also listing brokers

answer

b

question

After the closing of a property transaction, the balance on the owner's ledger card should be a. the same as the balance reflected on the broker's ledger card b. zero c. equal to the check the buyer must bring to closing d. equal to the month-end balance on the journal

answer

b

question

If an owner chooses not to renew the real estate brokerage firm's property management agreement, the property manager a. must advise tenants of who will be holding their security deposits prior to turning the money over to the owner or new manager b. is relieved of all responsibility to the tenants and must turn over all monies including security deposits to the owner upon the termination date of the old agreement c. may require the owners to renew the management contracts as long as tenants remain in the property d. will give the security deposits to the new manager who will notify the tenants

answer

a

question

Whose transaction file would include a copy of the Exclusive-Right-to-Sell contract? a. buyer's broker only b. listing broker only c. listing and buyer's brokers d. does not need to be retained beyond closing

answer

b

question

If a new brokerage firm will have a sales trust account, good business practice would indicate that the trust account should be opened a. after your first closing so you have funds to use to open it b. upon first receiving notice that the seller has accepted the offer c. depending on the time of year when banks has incentive programs d. upon or prior to accepting money belonging to others

answer

d

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