Connecticut Real Estate Broker Exam — All Questions

When a Connecticut broker receives a buyer's earnest-money deposit, the broker must:

• a.Deposit and hold it in a separate escrow or trust account, not commingled with the broker's own funds✓
• b.Deposit it into the brokerage operating account to earn interest for the firm
• c.Give it to the seller immediately
• d.Keep it in cash in the office safe until closing

Connecticut brokers must hold client money such as earnest-money deposits in a separate escrow/trust account and may not commingle it with personal or business funds or convert it to their own use. The broker is accountable for the funds and must disburse them only as the transaction and the parties' agreement allow. Commingling or conversion is a serious violation that can lead to discipline and Guaranty Fund exposure.

If the buyer and seller in a Connecticut transaction make conflicting demands for an escrow deposit the broker is holding, the prudent course is for the broker to:

• a.Release the money to whichever party asks first
• b.Keep the deposit as an extra commission
• c.Retain the funds in escrow and not release them until the dispute is resolved by the parties' written agreement or a court✓
• d.Split the deposit evenly without consent

A broker holding disputed escrow money is a neutral stakeholder and must not unilaterally decide who is entitled to it. The safe practice is to keep the funds in the trust account until the parties agree in writing or a court directs disbursement, using interpleader if necessary. Releasing disputed money on one party's demand exposes the broker to liability.

Connecticut brokers are expected to keep records of trust-account transactions primarily so that:

• a.They can charge higher commissions
• b.The account can be reconciled and reviewed to show client funds are intact and properly handled✓
• c.The county can assess property taxes
• d.Salespersons can be paid in cash

Recordkeeping and periodic reconciliation of the escrow/trust account let the broker and the Commission verify that every client's funds are accounted for and have not been commingled or misused. Complete records protect consumers and the broker, and inadequate records or unexplained shortages are grounds for discipline. This is a supervisory responsibility that falls on the broker, not the salesperson.