Kansas Real Estate Broker Exam — All Questions
3 questions
When a Kansas broker receives earnest money, KREC rules require the broker to:
- a.Deposit it in the firm's operating account until closing
- b.Deposit it into a trust or escrow account separate from the broker's own funds within the required time✓
- c.Hold it in the salesperson's personal account
- d.Immediately pay it to the seller
Kansas requires client money such as earnest money to be deposited into a trust or escrow account, separate from the broker's business and personal funds, within the time frame set by KREC rules. Commingling trust funds with the broker's own money is prohibited, and the broker must maintain accurate trust-account records.
A Kansas supervising broker who fails to keep the trust account reconciled and mixes client deposits with firm operating money has most likely committed:
- a.A permissible business practice
- b.A minor paperwork issue with no consequences
- c.An act that only the salesperson is responsible for
- d.Commingling, a violation subject to KREC discipline✓
Mixing client trust deposits with the broker's operating funds is commingling, and failing to reconcile the trust account compounds the problem. These are serious violations of Kansas license law for which the supervising broker—who is accountable for the trust account—may be disciplined by KREC, including fines or license action.
Kansas trust-account rules generally allow a broker to keep a limited amount of the broker's own money in the trust account only to:
- a.Cover bank service charges or maintain a required minimum balance✓
- b.Earn extra interest for the brokerage
- c.Pay affiliated salespersons their commissions
- d.Temporarily fund the firm's advertising
To avoid commingling while keeping the account open, Kansas rules permit a broker to hold only a small amount of the broker's own funds in the trust account for purposes such as covering bank service charges or a required minimum balance. Using trust money to pay commissions, advertising, or other firm expenses is conversion and prohibited.