Alaska Real Estate Broker Exam — All Questions

Under 12 AAC 64.180 an Alaska broker's trust account must sit in a federally insured bank authorized to do business in the state, and the account name must:

• a.include the broker's license number and office address
• b.match the registered brokerage name exactly, word for word
• c.carry the commission's own taxpayer identification number
• d.include the words “trust account” or “trustee account”✓

12 AAC 64.180(a) requires every broker to “establish one or more trust accounts in a federally insured bank authorized to do business in this state,” and provides that “the name of the account so established must include the words ‘trust account’ or ‘trustee account.’” The broker who opens the account is its trustee and is responsible for all signatories under 12 AAC 64.180(c); all trust accounts must be demand accounts under 12 AAC 64.180(e); the account name, number and bank must be filed with the commission under 12 AAC 64.180(b); and 12 AAC 64.110(e)(5) puts the account numbers on the office registration form as well.

The bank charges monthly maintenance fees on an Alaska broker's trust account. Under 12 AAC 64.180 and 12 AAC 64.250, the broker:

• a.must move to a bank that levies no maintenance charge at all
• b.must bill each client a proportionate share of them monthly
• c.may keep up to $100 of the broker's own funds there for them✓
• d.may pay them from the clients' funds already in the account

12 AAC 64.180(d) provides that “[i]f maintenance expenses are charged against a trust account, the broker shall deposit a sum of money not exceeding $100 to the trust account for the purpose of paying the maintenance expenses of the account,” topping it up when necessary but never holding more than $100 there. 12 AAC 64.250(3) forbids using trust funds to pay those expenses, and 12 AAC 64.250(4) forbids commingling the broker's own money into the account except for exactly this allowance. 12 AAC 64.220(c) requires a separate ledger to account for the service-charge money.

A closing has funded and an Alaska salesperson is owed a share of the commission. Under 12 AAC 64.250, the broker may not:

• a.withdraw the brokerage's own commission from the trust account
• b.keep a separate ledger for each transaction in the trust account
• c.give the principals an accounting of the funds held in trust
• d.pay the salesperson's commission straight from the trust account✓

12 AAC 64.250(1) forbids a broker to “pay a salesperson's commission directly from the trust account.” The brokerage's own commission is a different matter and does come out of the trust account: 12 AAC 64.240(a) requires each withdrawal to be separate and identified to the specific transaction, and 12 AAC 64.240(b) gives the broker 15 days after the transaction closes or is otherwise settled to take it. Keeping a per-transaction ledger is required by 12 AAC 64.220, and refusing the principals an accounting is itself prohibited by 12 AAC 64.250(6).

How often must an Alaska broker reconcile the trust account, and against what, under 12 AAC 64.220?

• a.Monthly, cross-checking the bank balance against the ledgers✓
• b.Quarterly, against the brokerage's general operating account
• c.Annually, against the closing statements for the year's deals
• d.Only when the commission's designee gives notice of an audit

12 AAC 64.220(f) requires trust accounts to “be reconciled monthly” in three steps: reconciling the bank statement with the check register, reconciling the monthly deposits and expenditures with the independent transaction ledger for each transaction, and cross-checking the bank balance with the sum of the transaction ledgers. 12 AAC 64.220(d) requires a ledger for every transaction, including ones where the deposit is held by a cooperating broker, a title company or another third party. Failure to comply with the trust account rules is deemed fraudulent and dishonest conduct by 12 AAC 64.260, which routes it straight to AS 08.88.071(a)(3)(A)(iv).

An Alaska broker's trust account earns interest. Under 12 AAC 64.210, that interest:

• a.does not belong to the broker, and the rate goes to the trustor✓
• b.belongs to the broker as a fee for administering the account
• c.must be remitted to the real estate recovery fund each quarter
• d.must be paid to a commission-approved real estate scholarship

12 AAC 64.210 provides that “[i]f a trust account bears interest, that fact and the rate of interest must be disclosed to the trustor,” and that “[t]o avoid commingling funds, interest earned does not belong to the broker.” Alaska routes no trust interest to the recovery fund or to education: AS 08.88.450(a) funds the recovery fund from licensee payments under AS 08.88.455, retained claim filing fees, income earned on the fund's own investments, and money deposited under AS 08.88.450(c).

12 AAC 64.125 defines adequate supervision by an Alaska broker. It expressly includes:

• a.attending in person every closing an affiliated licensee conducts
• b.personally signing every listing agreement the firm has taken in
• c.re-interviewing each client before any offer is presented to them
• d.reviewing files for completeness before the transaction is recorded✓

12 AAC 64.125(b) says adequate supervision by a broker and an associate broker in charge “includes providing for the review of files for completeness and accuracy and ensuring all required real estate related documents are on file, including all applicable local, state, and federal forms before the recording of the transaction,” communicating office policies to affiliated licensees, and supervising for compliance with the brokerage policies required by AS 08.88.685(a)(1) – (5). 12 AAC 64.125(e) allows the supervision itself to happen by computer, electronic mail, telephone or facsimile, but requires all transaction records to stay in the office where the supervised licensee is registered. Failing to supervise adequately is grounds for discipline against the broker under 12 AAC 64.125(a).

AS 08.88.685 and 12 AAC 64.117 require every Alaska broker to adopt a written policy manual. That manual must be:

• a.available to the commission and to the public on request✓
• b.filed with the commission before the office may open up
• c.approved by a majority of the affiliated licensees first
• d.reissued by the broker at the end of each calendar quarter

AS 08.88.685(a) requires the broker to “adopt written policies and procedures available to the commission and to members of the public on request” that require licensees to comply with all real estate laws, to act fairly and honestly, to notify the broker of any legal dispute or allegation of wrongdoing, to keep in regular communication with the broker, and to identify the relationships the firm may engage in. 12 AAC 64.117 adds required content: how the designated licensee is determined, when the broker becomes the designated licensee, neutral licensees, one licensee representing a party while assisting an unrepresented party, office-wide confidentiality, and supervision of teams. Nothing calls for pre-filing, a licensee vote, or quarterly reissue.

An Alaska broker of record will be away and cannot supervise even remotely. Under 12 AAC 64.078, the broker may hand supervision to:

• a.the brokerage's unlicensed office manager for thirty days
• b.no one; the office must suspend business until the return
• c.an associate broker, or by written contract another broker✓
• d.any affiliated salesperson with three years of experience

12 AAC 64.078(a) lets a temporarily absent broker of record supervise transactions, trust accounts or licensees “by computer, modem, facsimile, or telephone communications.” Where that is not possible, 12 AAC 64.078(b) gives two routes: in an office where an associate broker is available, the broker of record “may designate an associate broker to supervise transactions, trust accounts, or licensees including creating and signing transaction documents”; where none is available, the broker “may enter into a written contract with another broker” to do the same, and that substitute broker stays employed at their own registered office. Either way 12 AAC 64.078(c) requires notice to the commission on an approved form signed by both. A salesperson and an unlicensed manager are not eligible.

An Alaska broker discharges a salesperson for violating the licensing law but never tells the commission why. Under 12 AAC 64.090, that silence:

• a.is permitted, as the reasons are a private employment matter
• b.shifts responsibility for the acts to the salesperson's next broker
• c.constitutes ratification of the salesperson's acts by the broker✓
• d.opens a ninety-day period in which the license is held in abeyance

12 AAC 64.090(c) requires that when an associate broker or salesperson “is discharged or released from a broker's employ for violating the provisions of AS 08.88 or this chapter, the broker shall notify the commission, in writing, of the release or discharge circumstances and reasons for the broker's action,” and then states the consequence in terms: “Failure to immediately notify the commission constitutes ratification of the acts of the associate broker or salesperson by the broker.” AS 08.88.071(c) points the same way, attributing an employee's conduct to the broker where the broker knows of it and agrees “either actively or by remaining silent,” or ratifies it afterwards.

AS 08.88.291 and 12 AAC 64.110 require an actively licensed Alaska broker to:

• a.keep an office only where the brokerage employs other licensees
• b.register a mailing address, with no physical office required
• c.establish and maintain a principal office located in this state✓
• d.keep an office in each judicial district where property is listed

12 AAC 64.110(a) provides that “[a] real estate broker holding an active license shall establish and maintain a principal office in this state,” and AS 08.88.291(a) makes failure “to maintain a place of business in the state or to inform the commission of its location and the names and addresses of all real estate licensees employed at each location” grounds for suspension or revocation of the broker's license. The office registration form under 12 AAC 64.110(e) asks for the physical location as well as the mailing address, and 12 AAC 64.110(g)(2) requires the broker to provide for acceptance of legal service at the registered business address. Nothing ties offices to judicial districts, and the duty does not depend on employing other licensees.

Under AS 08.88.311 and 12 AAC 64.120, an Alaska branch office must be supervised by an associate broker who:

• a.has that branch as a principal office and supervises only it✓
• b.visits the branch at least once in every calendar month
• c.also holds the broker of record's written power of attorney
• d.supervises no more than three branch offices at one time

AS 08.88.311(a) requires a branch office to “be under the direct supervision of a real estate associate broker whose principal place of business is that office,” and adds that “[a]n associate broker may serve in the capacity of direct supervisor at only one office”; 12 AAC 64.120(b) repeats the point. AS 08.88.311(b) requires the branch to bear and be advertised only in the name of the principal office, though it may indicate that it is a branch. Operating a branch office without licensed personnel or without an associate broker in charge is grounds for suspension or revocation of the broker's license under 12 AAC 64.120(c).

An Alaska salesperson supervised from the principal office works out of a home office that is neither a principal nor a branch office. Under 12 AAC 64.128, the salesperson may not:

• a.meet clients there, or store any transaction records at the house
• b.work from a home office at all without a commission waiver
• c.be supervised by telephone or e-mail rather than in person
• d.display a business sign there, or use its address in advertising✓

12 AAC 64.128(c) says an associate broker or salesperson working out of a home office that is not a principal or branch office may not give the appearance or impression that it is one, may not “display a sign at the home office showing the name of the real estate business,” and may not “use the address of the home office in any form of advertising, business letterhead, or business cards” — the principal or branch office address must be used instead. Working from home is otherwise allowed: 12 AAC 64.128(a) simply holds the supervising broker to the ordinary supervision duties of 12 AAC 64.125, which 12 AAC 64.125(e) permits to be discharged electronically.

AS 08.88.351 fixes how long an Alaska broker keeps transaction records and when the clock starts. The period is:

• a.three years, running from the day the listing was taken
• b.five years, running from when the licensee leaves the firm
• c.seven years, running from the day the deed was recorded
• d.three years, running from when the listing or sale ends✓

AS 08.88.351(a)(1) requires the broker to “keep a complete record, for three years, of all real estate transactions in which the broker or employed licensees of the broker engaged.” AS 08.88.351(c) explains the clock: the three-year requirement “begins at the initiation of a transaction and continues, as applicable, until three years after the date” a listing agreement ends, a sales transaction closes or otherwise ends, a management contract ends, or another contractual or fiduciary obligation ends. So the period runs from the end of the engagement, not from the day the listing was signed or the deed recorded. A licensee must separately keep records of transactions in which the licensee was a principal for at least three years under AS 08.88.351(b)(1).

On termination of employment, an Alaska broker's records go to a business entity that is not another licensed broker. Under AS 08.88.351, the broker must:

• a.obtain the commission's written approval of the transfer first
• b.destroy any records the receiving entity declines to accept
• c.convert the records to microfilm before making the transfer
• d.ensure by contract that they stay available for three years✓

AS 08.88.351(a)(6) requires a broker, “if records are delivered to a partnership, corporation, or business entity other than another licensed broker upon termination of employment,” to “ensure by contract the maintenance and availability of those records for a minimum of three years in accordance with this section.” The obligation is discharged by contract rather than by commission approval, and destroying records would defeat both this rule and AS 08.88.351(a)(5), which requires account records and other documents to be made available to the commission on request for an investigation or audit.

An Alaska broker is closing the brokerage office. Under 12 AAC 64.111, what must go to the commission with the closing form?

• a.A final reconciliation signed by the brokerage's outside auditor
• b.A list of every client the brokerage served in the past decade
• c.A surety bond covering the brokerage's outstanding obligations
• d.A bank statement showing a zero balance in the trust accounts✓

12 AAC 64.111(a) requires a broker, before closing an office or branch office, to submit the commission's completed closing form, “a bank statement showing a zero balance in the trust accounts or appropriate trust funds documentation,” the name, address and telephone number of the custodian of records together with the location where the last three years of brokerage transaction records may be accessed, and a completed form for license transfer or change of status. 12 AAC 64.111(b) requires the broker to keep a trust account open “until the broker has distributed all the money due to be received to the proper person or entity or until the transaction … is transferred to another brokerage.”