Trust Funds
A broker is required to maintain a columnar record (trust fund ledger) for the trust account. The purpose of this record is to:
ATrack all broker income and expenses for tax purposes
BShow all trust fund receipts, disbursements, and balances for each beneficiary✓ Correct
CSatisfy the IRS requirement for businesses with escrow accounts
DDocument commission splits between associated licensees
Explanation
The columnar record (beneficiary ledger) tracks each client's trust funds separately, showing receipts, disbursements, and the balance attributable to each beneficiary. It allows the broker to verify that each client's funds are intact at all times and is subject to DRE audit.
Related California Trust Funds Questions
- When a real estate transaction closes, how should trust funds (e.g., the buyer's deposit) be handled?
- The illegal use of client trust funds for the broker's personal benefit is called:
- A buyer's earnest money is being held by the listing broker. The transaction falls through and there is a dispute about who is entitled to the funds. What should the broker do?
- A broker receives a $5,000 earnest money deposit on a Friday at 5 PM. The three-business-day deposit deadline would be:
- If a buyer's check for earnest money is made payable to the listing broker, and the buyer instructs the broker to hold the check uncashed until the offer is accepted, the broker should:
- A property manager collects security deposits from tenants. Under California law, security deposits:
- California regulations require that a broker maintain a 'trust fund bank account record' (journal). What does this record show?
- A buyer and seller have a dispute over who is entitled to an earnest money deposit after a transaction falls through. The broker should:
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