Property Management
An Illinois managing broker who manages residential rental properties holds security deposits in a trust account. Which of the following best describes the proper handling?
ADeposits may be commingled with the broker's operating funds
BDeposits must be kept in a separate, non-interest-bearing account
CDeposits must be held in a separate trust account and not commingled with the broker's personal or operating funds✓ Correct
DDeposits can be invested in real estate by the broker for additional returns
Explanation
Illinois law requires that security deposits (and all client funds) be held in a separate trust or escrow account and never commingled with the broker's personal or business operating funds. Commingling is a serious violation of the Illinois Real Estate License Act of 2000 and can result in license revocation and criminal charges. Proper record-keeping of all deposits and withdrawals is also required.
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