Nevada Real Estate Broker Exam — All Questions

Under NAC 645.650, a Nevada broker must keep complete real estate transaction and property management records for at least:

• a.3 years after the closing or the last activity involving the property
• b.5 years after the date the client signed the brokerage agreement
• c.7 years after the calendar year in which the commission was reported
• d.5 years after the closing or the last activity involving the property✓

NAC 645.650(1) requires a broker to "keep complete real estate transaction and property management records for at least 5 years after the date of the closing or the last activity involving the property, including, without limitation, offers that were not accepted and transactions that were not completed, unless otherwise directed by the Division." Two details in that sentence are commonly missed: the clock starts at closing or last activity, not at the signing of the brokerage agreement, and the duty covers files that never became transactions at all. Three and seven years are not the period, and a commission-reporting year is not the trigger. Subsection 2 supplies the other clock in the same regulation: a salesperson or broker-salesperson must provide any paperwork to the broker with whom he or she is associated "within 5 calendar days after that paperwork is executed by all the parties." A different and shorter retention rule applies to subdivision sales under NRS 119.182(1).

Under NAC 645.655, where must a Nevada broker's complete record of each real estate transaction be kept, and what must the broker do before moving those records?

• a.In this State, and obtain the Division's written approval before removing them
• b.Anywhere in the United States, and notify the Division in writing within 10 days of the move
• c.In this State, and give the Division written notice of the new location before removing them✓
• d.At the broker's principal office only, and file an amended license application before moving

NAC 645.655(2) requires that a complete record of each real estate transaction, together with the records NRS 645.310 requires, be "[k]ept in this State" and "[o]pen to inspection and audit by the Division upon its request during its usual business hours, as well as other hours during which the licensee regularly conducts his or her business." Subsection 4 supplies the moving rule: the broker "shall give written notice to the Division of the exact location of the records of the real estate broker and shall not remove them until he or she has delivered a notice which informs the Division of the new location." Notice before the move, not approval, and not notice after the fact. Subsection 3 adds that where records are stored electronically the broker must make the computer or other equipment available for the Division's inspection or audit, and subsection 1 requires each transaction to be numbered consecutively or indexed so that an audit is possible. NRS 645.195 obliges the Division to inspect brokers' transaction files, trust records and business accounts regularly, and NAC 645.645 requires the broker on demand to supply the documents and permissions an inspection needs.

A Nevada broker manages rental houses for several owners. Under NAC 645.655(8), the brokerage's property management money must be held in:

• a.two trust accounts distinct from its other trust accounts, one for rental operations and one for security deposits✓
• b.one trust account distinct from its other trust accounts, holding rents and security deposits together
• c.one trust account for each client owner, kept distinct from the accounts held for the brokerage's other client owners
• d.the brokerage's general trust account, with a separate ledger maintained for each managed unit

NAC 645.655(8) requires a broker engaged in property management for one or more clients to "maintain two separate property management trust accounts distinct from any trust account that the real estate broker may have for other real estate transactions. One trust account must be used solely for activities relating to rental operations, and the other trust account must be used solely for security deposits." Two accounts, and both walled off from the brokerage's ordinary transaction trust account - so a single combined account, an account per owner, and a ledger inside the general trust account all fall short. The ledger requirement is real but sits on top of the account structure rather than replacing it: the broker must keep a ledger account for each unit managed, whether or not one client owns several, with all rents and deposits for a unit deposited into and credited to the corresponding account and all authorized repairs and expenses paid out of that ledger. For this purpose a "unit" means one single-family dwelling unit.

Under NRS 645.310(5) and NAC 645.655(9), a Nevada broker who maintains a trust account must:

• a.balance it monthly, reconcile it within 30 days of the bank statement, and file an annual accounting✓
• b.balance it quarterly, reconcile it within 60 days of the bank statement, and file a quarterly accounting
• c.balance it annually, reconcile it within 90 days of the bank statement, and file a biennial accounting
• d.balance it monthly, reconcile it within 10 days of the bank statement, and file a monthly accounting

NRS 645.310(5) requires a broker to keep records of all money deposited in a trust account showing the date and source of each receipt, the date of deposit, the dates of withdrawals and for whose account the money is held; to "balance each separate trust account at least monthly"; and to "provide to the Division, on a form provided by the Division, an annual accounting which shows an annual reconciliation of each separate trust account." NAC 645.655(9) adds the reconciliation deadline: property management and transaction trust accounts "must be reconciled monthly by the real estate broker or the designee of the real estate broker within 30 days after receipt of the bank statement." Monthly, 30 days, annual filing - the other combinations change at least one of the three. The same subsection carries a consequence a broker should know: permitting any trust account, including any ledger account, to fall into deficit and stay there for more than 45 consecutive days in one year exposes the broker to discipline under NRS 645.633(1)(h). Failing to balance monthly or to submit the annual accounting is itself a ground for action under NRS 645.630(1)(g).