Trust Funds
A property manager collects security deposits from tenants. Under California law, security deposits:
ABelong to the landlord and may be deposited into the landlord's general account
BAre trust funds and must be held in a trust account unless the owner authorizes otherwise in writing✓ Correct
CMust be placed in an interest-bearing account for the tenant's benefit
DAre limited to one month's rent for all residential units
Explanation
Security deposits collected by a property manager are trust funds held on behalf of the owner. They must be maintained in a trust account unless the owner authorizes the property manager in writing to hold funds differently. California law does not require interest-bearing accounts for tenant security deposits.
Related California Trust Funds Questions
- A broker receives a $10,000 earnest money deposit in cash from a buyer. The broker must:
- Interest earned on funds held in a broker's trust account generally belongs to:
- The illegal use of client trust funds for the broker's personal benefit is called:
- A broker's trust fund records must be retained for how long after the transaction closes or the funds are disbursed?
- A broker receives a $5,000 earnest money deposit on a Friday at 5 PM. The three-business-day deposit deadline would be:
- Conversion of trust funds occurs when a broker:
- A broker receives an earnest money check made out to the seller. The buyer instructs the broker to hold the check uncashed until offer acceptance. The broker MUST:
- If a broker discovers a shortage in the trust account caused by a bank error, what is the BEST course of action?
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