Chapter 14 True/False

Question 1

Client funds include promissory notes.

True
False

Answer 1

False: The definition of client funds specifically states promissory notes are not included.

Question 2

The depository institution that is holding funds in an interest-bearing real estate common trust account may deduct a service charge from the interest earned before remitting it to the Department of Administration.

True
False

Answer 2

True: Interest earned on an interest-bearing real estate trust account is remitted annually to the Department of Administration for use in homeless assistance programs.

Question 3

The interest earned by the interest-bearing real estate common trust account is remitted to the Department of Administration.

True
False

Answer 3

True: The interest is remitted to the Department of Administration.

Question 4

A buyer would like to pledge a boat valued at $10,000; a firm can hold this item.

True
False

Answer 4

False: A firm cannot hold a nondepositable item.

Question 5

A firm shall deposit all real estate trust funds received by the firm into a real estate trust account within 48 hours of receipt of the monies.

True
False

Answer 5

True: Real estate trust funds means any cash, checks, share drafts, drafts or notes, other than promissory notes, received by a firm or a firm’s licensees or timeshare people on behalf of a principal or any other person.

Question 6

All client funds a real estate firm holds must be placed into an interest-bearing real estate common trust account.

True
False

Answer 6

True: Client funds include all down payments, earnest money deposits or other money related to a conveyance of real estate that is received by a firm or its licensees on behalf of the firm or its licensees or any other person.

Question 7

A firm can withdraw and use the interest of an interest-bearing real estate common trust account as long as the firm has the permission of all the parties.

True
False

Answer 7

False: Under no circumstances can a firm use or claim the interest of an IBRETA account.

Question 8

If a buyer wants to receive interest earned from earnest money, a real estate licensee may draft the agreement.

True
False

Answer 8

False: An attorney or the parties to the transaction need to draft the agreement.