Trust Funds
A DRE audit of a broker's trust account reveals that the balance of individual client ledgers is less than the total bank balance. This condition is called:
AA trust fund shortage
BA trust fund overage✓ Correct
CCommingling
DConversion
Explanation
A trust fund overage (or surplus) occurs when the total in the trust account exceeds the sum of all beneficiary ledger balances. This may indicate that the broker has deposited personal funds into the account (commingling). A shortage — where the bank balance is less than the ledger total — is more serious and may indicate conversion.
Related California Trust Funds Questions
- Can a property management broker combine the security deposits for multiple tenants in a single trust account?
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