Property Management
A Rhode Island property manager who collects rents and security deposits must maintain separate trust accounts because:
AIt simplifies tax preparation
BState law requires segregation of client funds from the manager's own funds✓ Correct
CIt earns higher interest rates
DIt is only required for commercial properties
Explanation
Rhode Island law requires property managers to maintain client funds in separate trust or escrow accounts, segregated from the manager's personal or business operating funds, to protect client interests and prevent commingling.
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Key Terms to Know
Escrow
A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Math Concepts
State-Specific Concepts
Trust Account Rules
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