Massachusetts Real Estate Broker Exam — All Questions

In Massachusetts, client deposit money received in a transaction must be:

• a.Kept by the salesperson until closing
• b.Deposited into the broker's personal account
• c.Held in the broker's escrow account, separate from the broker's own funds✓
• d.Sent to the Board of Registration

Only a Massachusetts broker may hold client escrow money, and it must be kept in a separate escrow account, not commingled with the broker's business or personal funds. A salesperson who receives a deposit must promptly deliver it to the broker. Commingling or converting escrow money is a serious violation of Board rules (254 CMR) and license law.

If a buyer and seller in a Massachusetts sale dispute who is entitled to the escrow deposit, the broker holding the funds should:

• a.Retain the deposit in escrow until the parties agree in writing or a court directs release✓
• b.Give the deposit to the seller because the buyer defaulted
• c.Return the deposit to the buyer to avoid a complaint
• d.Move the deposit into the broker's operating account for safekeeping

When entitlement to an escrow deposit is disputed, the Massachusetts broker must keep the money in the escrow account and may not unilaterally decide who receives it. Release should occur only on the parties' written agreement or as directed through an authorized legal process such as a court order or interpleader. Unilateral release or converting the funds exposes the broker to discipline and liability.

Which recordkeeping practice is required of a Massachusetts broker who holds escrow funds?

• a.Recording deposits only when the transaction closes
• b.Maintaining accurate escrow-account records that identify each client's funds and reconcile to the account balance✓
• c.Combining all clients' money with office operating funds for simplicity
• d.Keeping records only if a client requests them

A Massachusetts broker must keep accurate, current records of escrow funds so that each client's money is identifiable and the account reconciles to the total held, and must make those records available to the Board. Client funds may never be combined with operating money. Good recordkeeping protects consumers and is the broker's defense in an audit or complaint.