Unit 8 - Vocab

Question 1

Escrow

Answer 1

taking care of people’s money, money that is held in trust and must be accounted for at all times. it may not be commingled with the broker’s money nor taken out of the account (conversion) by the broker without authorization to pay the broker’s bills.

Question 2

Escrow account

Answer 2

refers to the account where the money of other people is kept by the broker sometimes called “trust account”

Question 3

a broker must have at least two different types of accounts:

Answer 3

an escrow account and an operating account

Question 4

A rental/property management broker will have three separate accounts:

Answer 4

an escrow account, a rental account and an operating account

Question 5

When handling money on an installment land contract, the broker__

Answer 5

can consider the transaction completed when the buyer has been afforded the opportunity to record the agreement, unless the agreement specifies otherise

Question 6

when handling money for another under an agreement of cemetery property, the transaction__

Answer 6

is considered closed when the buyer receives a copy of the agreement of sale

Question 7

When a security deposit is held by a broker in an escrow account, the completion of the transaction shall be at the end of the ____

Answer 7

tenancy

Question 8

Tenancy

Answer 8

occupancy of the property by legal means

Question 9

A broker must deposit money belonging to another into an escrow account by ____ following its receipt in the real estate office where the escrow records are maintained.

Answer 9

the end of the next business day

Question 10

If the money comes from another broker in the form of a check, the broker may, ____

Answer 10

with written consent, refrain from depositing the money into an escrow account pending the seller’s or lessor’s acceptance of the offer.

Question 11

If the money held in escrow is expected to be held six months or longer, the broker is encouraged to

Answer 11

deposit the money into an interest bearing escrow account. The interest on an interest bearing account will be disbursed in the same manner as the principal amount, unless the parties direct otherwise by agreement. A broker cannot collect the interest on an interest-bearing account unless the broker is a lessor as provided for in the Landlord Tenant Act.

Question 12

Mixing money belonging to others or adding business or personal money to the escrow account (except for service charges) is a very serious offense for brokers. For this reason, the Commission has created these specific standards:

Answer 12

-A broker cannot commingle money (or interest earned on an escrow account) that is supposed to be in escrow with any other funds- business, personal or operating;
-A broker may deposit business or personal funds to provide for service charges charged by the bank or depository in order to keep a minimum balance;
-A broker cannot misappropriate money that is required to be held in escrow for any reason for any account!

Question 13

Interplead

Answer 13

seeking a court decision to determine who should receive the funds held for two parties by disinterested third party. (let the judge decide)

Question 14

[escrow] Every broker must:

Answer 14

-Deposit, hold and account for all monies until the consummation of the transaction;
-Have each salesperson give the broker promptly a receipt of monies;
-Keep good records of all funds deposited in the escrow account.
-Have records of the escrow account available for inspection by the Commission;

Question 15

The broker can consider the transaction completed when the buyer:

Answer 15

-On an installment land contract, has been afforded the opportunity to record the agreement.
-Under an agreement of cemetery property, receives a copy of the agreement of sale.

Question 16

A broker cannot collect the interest on an ___ account unless the broker is a lessor as provided for in the Landlord Tenant Act.

Answer 16

interest-bearing

Question 17

Escrow money in dispute:

Answer 17

-The broker must retain the money in escrow until the dispute is resolved.
-The broker may, following 30 days’ notice to the parties, petition the county court having jurisdiction in the manner to interplead the rival claimants.