Trust Funds
If a broker discovers a shortage in the trust account caused by a bank error, what is the BEST course of action?
ACover the shortage with the broker's personal funds and document the correction✓ Correct
BClose the account and open a new one
CWait to see if the bank corrects it
DReport it to the DRE immediately and close the business
Explanation
If a shortage results from a bank error, the broker should immediately use their own funds to cover the shortage (to protect client funds), notify the bank, and document the correction in the trust account records. Client funds must always be fully available.
Related California Trust Funds Questions
- A salesperson who works for Broker A receives an earnest money deposit. Without telling Broker A, the salesperson deposits it into the salesperson's own personal account. This is:
- Conversion of trust funds occurs when a broker:
- When a real estate transaction closes, how should trust funds (e.g., the buyer's deposit) be handled?
- A salesperson collects an earnest money deposit from a buyer. What must the salesperson do with these funds?
- Which of the following is considered a trust fund under California law?
- Which California government agency has primary jurisdiction over the investigation of trust fund violations by real estate licensees?
- A broker's trust account shortage (the bank balance is less than the sum of all beneficiary ledger balances) most likely indicates:
- Commingling in real estate refers to:
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →