California Real Estate Broker Exam — All Questions

Under Commissioner's Regulations 2830-2835, when a California broker receives trust funds (such as a buyer's deposit) on behalf of another, the broker must generally place them into a neutral escrow, into the hands of the principal, or into a trust account:

• a.Within 30 days
• b.Only after closing
• c.Whenever convenient
• d.Not later than three business days after receipt✓

California requires a broker who accepts trust funds to place them into a neutral escrow depository, into the hands of the broker's principal, or into a trust account not later than three business days after receipt (unless the buyer's written instructions direct the deposit be held uncashed until acceptance). Prompt handling protects client money and is central to broker trust-fund duties.

California's trust-fund rules prohibit commingling. Which broker action is nonetheless permitted?

• a.Keeping a limited amount of the broker's own funds (up to $200) in the trust account to cover bank service charges✓
• b.Depositing client trust funds into the broker's personal checking account
• c.Using one client's deposit to cover a shortage owed to another client
• d.Paying the broker's office rent directly from the trust account

Commingling client trust funds with the broker's own money is prohibited, but California regulations allow the broker to keep a small amount of the broker's own funds (up to $200) in the trust account to cover bank service charges. Depositing trust funds in personal accounts, using one beneficiary's money for another, or paying business expenses from trust funds are all prohibited conversions or commingling.

How often must a California broker reconcile the trust-account records under the Commissioner's Regulations?

• a.Once per year
• b.Only when the DRE audits
• c.At least monthly, reconciling the control record with the separate beneficiary records✓
• d.Never, if a bank statement is retained

California brokers must maintain a control record of all trust funds and separate records for each beneficiary and reconcile them at least once a month. Monthly reconciliation catches shortages and errors early. Failure to keep proper trust records or reconcile is a frequent basis for DRE discipline against the broker.