Real Estate Math
A Michigan broker's trust account contains $85,000 in client deposits. A client owes the broker $3,500 in commissions from a completed transaction. Can the broker take the $3,500 from the trust account?
AYes, the broker earned it
BNo, the trust account funds belong to clients and cannot be used to pay broker compensation✓ Correct
CYes, if the client has authorized it in writing
DYes, as long as it is documented in the broker's files
Explanation
Trust account funds belong to clients and must never be commingled with or used to pay broker compensation. The broker must receive their earned commission through a separate transaction — the trust account cannot be used for this purpose.
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
State-Specific Concepts
Trust Account Rules
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