Chapter 14 Vocabulary

Question 1

Real estate trust funds:

A. A statistical method of assessing the credit risk of a loan applicant.

B. Any cash, checks, share drafts, drafts or notes received by a firm or licensee on behalf of a principal or any other person.

C. The gradual paying of a debt through systematic payments of principal and interest over a predetermined period.

D. The business of bringing buyers and sellers together in the marketplace.

Answer 1

B. Any cash, checks, share drafts, drafts or notes received by a firm or licensee on behalf of a principal or any other person.

Question 2

IBRETA:

A. A claim or encumbrance that would affect or burden an owner’s title to real estate.

B. An interest-bearing real estate trust account for the deposit of all down payments, earnest money and other trust funds received by the firm and related to the conveyance of real estate.

C. A contract used to terminate a contract for sale or agency agreement when the parties mutually agree to terminate their original agreement.

D. The sale or lease of a business and the business’ goodwill, enterprise or opportunity, including a sale of the majority of assets or stocks of the business.

Answer 2

B. A firm that receives client funds is required to open an interest-bearing real estate trust account for the deposit of all down payments, earnest money and other trust funds received by the firm and related to the conveyance of real estate. IBRETA accounts are only for client funds.

Question 3

Client funds:

A. A lump sum payment due at the end of a mortgage contract period.

B. A legal source of a person’s income.

C. An estate with a duration limited to the life of the party holding it or of some other person.

D. All down payments, earnest money deposits or other money related to a conveyance of real estate that is received by a licensee on behalf of a firm or any other person.

Answer 3

D. All down payments, earnest money deposits or other money related to a conveyance of real estate that is received by a licensee on behalf of a firm or any other person. “Client funds” do not include promissory notes.