Unit 9: Broker & Property Manager Contracts

Question 1

If sellers misrepresented a latent defect in the seller’s disclosure, what would have needed to be done for the broker not to be held liable?

Answer 1

The broker would have needed to perform a visual inspection and found no obvious defects.

Question 2

Where do brokers hold trust funds (other people’s money)?

Answer 2

In a trust account.

Question 3

What can go into a broker’s trust fund?

Answer 3

• earnest money
• security deposits
• rents
• taxes
• insurance
• escrow payments
• unearned commissions

Question 4

If a brokerage firm has a trust account, what are they required to maintain?

Answer 4

An account for the deposit of trust funds.

Question 5

T/F Licensees must give earnest money checks to the listing brokerage firm immediately after the offer is accept.

Answer 5

True

Question 6

What kind of account does a trust account need to be?

Answer 6

A demand account which freely allows for the deposit and withdrawal of funds.

Question 7

What’s the difference between commingling and conversion?

Answer 7

Commingling is when personal funds or the firm’s funds are mixed with the trust funds. Conversion is when trust funds are used for personal reasons or given to the wrong people.

Question 8

What is a property management agreement?

Answer 8

A contract between the owner of an income-producing property and a brokerage firm that will act as the property manager.

Question 9

Who are the parties in a property management contract?

Answer 9

Property owner - principal

Property manager - general agent

Question 10

Can broker associates and sales people be a party of a property management contract?

Answer 10

Yes but they need to tell their brokerage firm.

Question 11

What are the responsibilities of the property manager?

Answer 11

1. Maintain value of the property
2. Generate income from the property
3. Find well-qualified tenants