Iowa Real Estate Broker Exam — All Questions

When an Iowa broker receives earnest money on behalf of the parties, the broker must:

• a.Keep it in the firm's operating account until closing
• b.Deposit it into a separate trust account and keep it apart from the broker's own funds✓
• c.Give it to the listing salesperson to hold personally
• d.Send it to the Iowa Real Estate Commission for safekeeping

Iowa requires client funds such as earnest money to be held in a trust account separate from the broker's business and personal funds. Commingling trust money with the broker's own money is prohibited, and the broker must keep accurate records. Mishandling trust funds is a common and serious basis for discipline.

An Iowa broker holds a disputed earnest-money deposit after a sale falls through and both buyer and seller claim it. The broker should:

• a.Release the money to whichever party asks first
• b.Keep the deposit as a cancellation fee
• c.Retain the funds in trust and follow the law and rules for disbursing disputed deposits, such as interpleader if needed✓
• d.Split the deposit evenly without either party's consent

When ownership of trust money is disputed, an Iowa broker must keep the funds in the trust account and not release them arbitrarily. The broker follows the applicable law and rules for resolving disputed deposits, which may include obtaining written mutual agreement or depositing the funds with a court (interpleader). The broker may not simply keep or unilaterally split the money.

A supervising Iowa broker reconciles the trust account monthly primarily to:

• a.Ensure the account balances against the funds owed to each client and detect errors or shortages✓
• b.Increase the interest earned for the brokerage
• c.Avoid having to keep client ledgers
• d.Allow the broker to use client funds temporarily

Regular reconciliation compares the trust-account bank balance to the total of individual client ledger balances so the broker can confirm the account holds exactly what is owed and can catch errors or shortages quickly. It does not authorize using client funds, and per-client ledgers remain required. This oversight is a core broker responsibility.