Property Management
A property manager who commingles tenant security deposits with personal funds is:
APermitted if the amounts are tracked in a ledger
BViolating their fiduciary duty and potentially the law✓ Correct
CAllowed under Illinois law if the landlord owns fewer than four units
DOnly improper in commercial property management
Explanation
Commingling — mixing a client's funds (such as security deposits) with personal or operating funds — is a serious violation of fiduciary duty and violates Illinois law. Security deposits must be held in separate escrow or trust accounts.
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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.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Math Concepts
State-Specific Concepts
Trust Account Rules
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