Property Management
A Connecticut property management company maintains several managed properties' security deposits. To best comply with Connecticut law and fiduciary duties, these deposits should be held in:
AA single business operating account for convenience
BSeparate interest-bearing trust accounts that are not commingled with operating funds✓ Correct
CThe property manager's personal savings account
DNon-interest-bearing accounts to simplify accounting
Explanation
Connecticut law requires security deposits to be maintained in interest-bearing accounts. Best practice and fiduciary duty require keeping client funds in separate trust accounts not commingled with the manager's operating or personal funds.
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Key Terms to Know
Fiduciary Duty
The highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Buyer's AgentA real estate licensee who represents the buyer's interests in a transaction, owing fiduciary duties to the buyer.
Seller's Agent (Listing Agent)A real estate licensee who represents the seller's interests, markets the property, and owes fiduciary duties to the seller.
State-Specific Concepts
Trust Account Rules
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