A broker who is also a property manager collects rent on behalf of an owner. These rental proceeds are:
Why Trust funds that must be kept separate from the broker's own money Is Correct
Answer B: Trust funds that must be kept separate from the broker's own money
Exam Tip: Trust Funds
Trust fund questions test the rules for handling client money. Know the deadlines for depositing trust funds, what constitutes commingling vs. conversion, and the penalties for violations.
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Related California Questions
- Under California law, a real estate broker who manages property for clients must maintain a separate trust account for client funds. Mixing client funds with the broker's personal funds is called:Agency
- A property manager collects rent on behalf of an owner. Under California law, within how many days after the close of the month must the manager provide the owner with an itemized accounting of funds received and disbursed?Property Management
- Real estate trust funds must be deposited into the trust account within how many business days of receipt?DRE & Licensing
- Under California law, a real estate broker must deposit trust funds received into a neutral escrow or into the broker's trust fund account no later than:Trust Funds
- A broker's trust fund account must be maintained at:Trust Funds
- A broker may maintain a personal (broker's) funds balance in the trust account of up to how much to cover bank service charges?Trust Funds
- A property manager who collects rents, signs leases, and manages maintenance on behalf of an owner must hold which California license?Property Management
- A real estate licensee in California is found to have commingled client funds with their personal bank account. This violates:DRE & Licensing
Key Terms to Know
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Closing CostsFees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
ProrationThe division of ongoing property expenses (taxes, HOA dues, rents) between buyer and seller at closing based on their respective days of ownership.
State-Specific Concepts
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