Property Management
A Rhode Island property manager who collects rents and security deposits on behalf of property owners must:
AHold all funds in the property manager's personal checking account
BMaintain a separate escrow or trust account for client funds✓ Correct
CDeposit all funds into the owner's account within 24 hours
DObtain a separate CPA license to manage client funds
Explanation
Rhode Island property managers must maintain separate escrow or trust accounts for client funds (rents, security deposits) and keep them separate from the manager's own funds to 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.
State-Specific Concepts
Trust Account Rules
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