Idaho Real Estate Broker Exam — All Questions

When an Idaho brokerage receives earnest money, the designated broker must:

• a.Deposit it into the brokerage's operating account until closing
• b.Deposit it into a separate trust account by the deadline set in IREC rules, keeping it separate from firm funds✓
• c.Hold it in the listing agent's personal account
• d.Forward it immediately to the Idaho Real Estate Commission

Idaho requires client funds such as earnest money to be deposited into a separate trust (real estate) account within the time frame set by IREC rules and kept apart from the brokerage's operating and personal money. Commingling trust funds with business funds is prohibited, and the designated broker is accountable for accurate trust-account records.

An Idaho broker who also manages rental properties for owners must handle the collected rents and security deposits by:

• a.Mixing them with the sales earnest-money account for convenience
• b.Keeping the funds only in the property owner's personal account
• c.Depositing them into the broker's commission account
• d.Holding them in a trust account with records that identify each owner's funds✓

Property-management money—rents, security deposits, and owner reserves—must be held in a trust account with records that separately identify each owner's funds. Idaho prohibits commingling client money with the broker's own funds and requires accurate accounting. A broker managing rentals therefore maintains trust-account controls just as for sales earnest money.

Which practice by an Idaho designated broker most clearly violates trust-account rules?

• a.Using earnest money held in trust to pay the brokerage's office rent✓
• b.Depositing earnest money into the trust account within the required time
• c.Keeping a small amount of the broker's own money in the trust account to cover bank service charges, if allowed by rule
• d.Maintaining a ledger for each client's trust funds

Using client trust money to pay the brokerage's own expenses is conversion of trust funds, a serious violation. Depositing earnest money on time and keeping accurate per-client ledgers are required practices, and IREC rules allow a broker to keep a limited amount of the broker's own funds in the trust account only to cover authorized bank service charges.