Delaware Real Estate Broker Exam — All Questions

Delaware trust-account rules prohibit 'commingling,' which means a broker must not:

• a.Hold deposits from more than one client in the escrow account
• b.Mix client escrow funds with the broker's own business or personal funds✓
• c.Keep written records of deposits
• d.Deposit earnest money at all

Commingling is mixing clients' escrow money with the broker's own operating or personal funds. Delaware requires client money to be kept separate in a designated escrow/trust account so it is always identifiable and protected. Holding multiple clients' funds together in a properly maintained escrow account is normal; mixing them with the broker's own money, or converting them, is prohibited and a common disciplinary charge.

If the parties to a Delaware transaction dispute who is entitled to an escrow deposit the broker holds, the safest action for the broker is to:

• a.Give the funds to the seller as liquidated damages
• b.Return the funds to the buyer to avoid a complaint
• c.Deduct a fee and split the rest
• d.Retain the deposit in escrow until the parties agree in writing or a court resolves the dispute✓

A Delaware broker holding a disputed deposit is a neutral stakeholder and should not decide the dispute. The prudent course is to keep the money in escrow until the parties provide written agreement or a court directs disbursement, using interpleader if needed. Unilaterally paying out disputed funds exposes the broker to liability and possible discipline.

Delaware brokers must keep escrow records so that the account can be:

• a.Reconciled and audited to show all client funds are properly accounted for✓
• b.Used to secure the broker's personal loans
• c.Hidden from the Commission
• d.Closed at the end of every transaction and reopened later

Accurate escrow recordkeeping and reconciliation let the broker and the Commission verify that client funds are intact and properly handled. The records must be available for review; an escrow account is a fiduciary account, not collateral for the broker's own borrowing. Poor records or shortages are grounds for discipline.