Maryland Real Estate Broker Exam — All Questions

The Maryland Real Estate Guaranty Fund exists primarily to:

• a.Pay the operating budget of the MREC
• b.Provide down-payment loans to buyers
• c.Reimburse consumers who suffer an actual monetary loss from certain licensee misconduct✓
• d.Insure brokers against ordinary business losses

The Maryland Real Estate Guaranty Fund compensates members of the public who obtain a final judgment against a licensee based on conduct such as fraud or misrepresentation in a licensed transaction and cannot otherwise collect. It is a consumer-protection fund, not an operating account, a lending program, or general business insurance for brokers. Payments are subject to statutory limits per claim.

After the Maryland Real Estate Guaranty Fund pays a claim on a licensee's behalf, that licensee's license is generally:

• a.Suspended until the licensee repays the fund with interest✓
• b.Automatically upgraded to broker
• c.Unaffected because the fund covers all losses
• d.Transferred to another broker

When the Guaranty Fund pays a claim arising from a licensee's misconduct, the licensee's license is suspended and is not restored until the licensee reimburses the fund, typically with interest. This protects the fund and deters misconduct. The fund pays the injured consumer first, then pursues repayment from the responsible licensee.

A broker who mishandles client trust money in Maryland can expose the public to a claim against the Guaranty Fund. To avoid this, the broker must:

• a.Keep trust money in the broker's operating account for convenience
• b.Maintain client funds in a separate trust/escrow account and never commingle them✓
• c.Lend trust money short-term to cover office expenses
• d.Distribute disputed deposits immediately to end the dispute

Maryland brokers must hold client funds in a separate trust (escrow) account and never commingle them with business or personal funds or use them for other purposes. Commingling or converting trust money is a serious violation and a common source of Guaranty Fund claims and license discipline. Disputed deposits must be retained until the parties agree or a court directs disbursement.