Property Management
What is the purpose of a property management operating account separate from the trust/escrow account?
ATo hold tenant security deposits
BTo hold the manager's own funds for business operations✓ Correct
CTo hold undisbursed rent collected on behalf of owners
DTo hold funds pending title company approval
Explanation
The property manager's operating account holds the management company's own funds (management fees, operating expenses). It must be kept separate from the trust/escrow account holding client funds (rent, security deposits) to avoid 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.
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