New Jersey Real Estate Broker Exam — All Questions

A New Jersey broker receives an earnest money deposit. The broker must:

• a.Deposit it in the firm's operating account and note it in the ledger
• b.Keep it as cash in the office safe until closing
• c.Maintain it in a separate trust or special account, apart from the broker's personal and business funds✓
• d.Give it to the listing salesperson to hold personally

Escrow money such as an earnest money deposit must be held in a separate trust or special account, distinct from the broker's personal and business operating funds. Commingling or converting client money is prohibited and is a frequent basis for discipline.

In New Jersey, when the buyer and seller dispute who is entitled to an escrow deposit the broker holds, the broker should:

• a.Immediately release the funds to whichever party asks first
• b.Continue to hold the funds until the dispute is resolved by the parties or a court, or follow the procedure allowed by New Jersey rules✓
• c.Split the deposit evenly between the parties
• d.Transfer the funds to the broker's operating account for safekeeping

When entitlement to an escrow deposit is disputed, the broker must not simply pay one side. The broker holds the funds until the parties agree, a court decides, or the broker follows the specific procedure allowed under New Jersey rules. Improper release can create liability.

A salesperson affiliated with a New Jersey broker personally receives an earnest money check from a buyer. The salesperson must:

• a.Promptly deliver the funds to the broker, who is responsible for the trust account✓
• b.Deposit the check into the salesperson's own account and reimburse the broker later
• c.Hold the check until the salesperson's commission is confirmed
• d.Endorse the check to the seller directly

Only the broker is responsible for the trust account. A salesperson who receives client funds must deliver them promptly to the broker so the money can be deposited into the broker's trust account. Salespersons may not hold or commingle client money.