Oklahoma Real Estate Broker Exam — All Questions

Under OAC 605:10-13-1 and 605:10-13-2, who must be a signer on an Oklahoma brokerage's trust account?

• a.Any associate the broker designates in writing to the financial institution
• b.The title company handling the closing, as the neutral third-party escrow
• c.The listing associate, for the deposits taken on that associate's listings
• d.The broker, who is required to be a signor on any account holding such funds✓

Rule 605:10-13-1(a)(1)(B) is explicit: "the broker is required to be a signor on any brokerage account where such funds are held." Subparagraph (C) adds that the account must be in the name of the broker or brokerage as it appears on the license or on the trade name registered with the Commission, and must be "styled as a trust or escrow account." Rule 605:10-13-2(3) closes the other side, providing that an associate "shall not be authorized to open or maintain a trust or escrow account, or be a signer on a trust or escrow account wherein the associate is providing licensed activities," and (1) requires the associate to turn over all documents, files and monies to the broker promptly. That is why neither a designated associate nor the listing associate can hold the pen. A title company may run its own settlement escrow under its own arrangements, but that is not the brokerage's trust account and it does not displace the broker's accountability under 858-312(6).

Under OAC 605:10-13-1, escrow funds must be deposited before the end of the:

• a.Next banking day after acceptance of an offer or receipt of the funds
• b.Fifth business day after acceptance of an offer or receipt of the funds
• c.Tenth calendar day after acceptance of an offer or receipt of the funds
• d.Third banking day after acceptance of an offer or receipt of the funds✓

Rule 605:10-13-1(a)(1)(D) provides that "all escrow funds shall be deposited before the end of the third banking day following acceptance of an offer by an offeree or receipt of escrow funds unless otherwise agreed to in writing by all interested parties." Two details matter as much as the number. The clock starts at whichever comes first in practice, acceptance or receipt, and the deadline counts banking days rather than calendar or business days. And the parties can move it, but only by a writing signed by all interested parties — an oral understanding with one side does not. Subparagraph (E) then requires the funds to stay in the account "until the transaction involved is consummated or terminated and proper accounting made," and (F) requires an accurate and detailed record at all times. On the way out, subsection (g) requires the broker to pay over all sums promptly after closing, and makes failure to do so within three days after a closing prima facie evidence of a violation.

How much of a broker's own money may sit in an Oklahoma trust account under OAC 605:10-13-1?

• a.None whatever, since any personal funds in the account are commingling
• b.Enough to keep the account open and cover the institution's service charges✓
• c.Up to one month of the brokerage's operating expenses, held as a buffer
• d.Any amount, so long as the broker's funds are ledgered as a separate client

Rule 605:10-13-1(b) provides that "a broker may not keep any personal funds in the trust account except amounts sufficient to insure the integrity of the account and cover any charges made by the financial institution for servicing the trust or escrow account." That is a narrow, purpose-limited allowance rather than a general license, and it exists because a trust account that gets closed for a service charge protects nobody. Section 858-312(16) makes it a cause for discipline to commingle "with the licensee's own money or property the money or property of others which is received and held by the licensee, unless the money or property of others is received by the licensee and held in an escrow account that contains only money or property of others." So the absolute-zero answer overstates a real rule, and the operating-buffer and separate-ledger answers abandon it — a ledger entry does not change whose money is in the account. Rule 605:10-13-1(d) adds that a broker need not maintain a trust account at all unless the broker accepts money or depositable items belonging to others.

Which accounts must an Oklahoma broker notify the Commission of in writing, under OAC 605:10-13-1?

• a.Only the single escrow account used to hold earnest money on sale contracts
• b.Only accounts opened at financial institutions located outside of Oklahoma
• c.Only accounts on which some person other than the broker is a signer too
• d.Trust, escrow, security deposit, rental management operating and interest accounts✓

Rule 605:10-13-1(e) requires the broker "to notify the Commission in writing of all trust or escrow accounts, security deposit accounts, rental management operating accounts, and interest bearing accounts in which trust funds are held," and adds that "if a broker is a signor on a principal's account, the broker shall register that account as a trust account." The broker must also tell the Commission in writing when any such account is closed and no longer in use. The same paragraph is the audit hook: "all records relating to the broker's trust accounts, including bookkeeping system data, shall be made available for inspection by the Commission or its authorized representatives" — an inspection power that does not wait for a consumer complaint. The narrowing answers all invent a limit the rule does not draw; a rental management operating account and a security deposit account are named expressly, wherever the bank sits and whoever else signs. Section 858-313(3) makes the brokerage records that result from a Commission audit confidential and not public records.

How long must an Oklahoma broker keep trust account records, under OAC 605:10-13-1?

• a.Five years from disbursal, the first two of them in the original format✓
• b.Three years from disbursal, in whatever format the broker finds easiest
• c.Five years from disbursal, in the original paper format for all five years
• d.Two years from disbursal, after which the records may all be destroyed

Rule 605:10-13-1(l) requires a broker to "maintain all records and files for a minimum of five (5) years after consummation or termination of a transaction," and provides that "in the case of trust account records the five years shall commence with the date of disbursal of funds." Subsection (m)(1) then sets the format rule: "trust account records shall be maintained by the broker in their original format for a minimum of two (2) years. Trust account records may then be transferred to an alternative media for the remaining required record retention time." So neither of the single-number answers is right — three years is short of the retention period, two years is only the original-format period, and nothing requires paper for the full five. Other records may move to alternative media at any time under (m)(2). After a quality assurance check confirming every document was imaged legibly, the originals may be destroyed under (m)(4), but the broker must still keep the means of viewing the media and produce "a true, correct and legible paper copy to the Commission upon request." Subsection (l) also requires records to be destroyed in a secure manner.

Buyer and seller are in dispute over the earnest money and no civil action has been filed. Under OAC 605:10-13-3, the broker may disburse on the broker's own good-faith decision:

• a.Thirty days after final termination, and after fifteen days' written notice to all parties✓
• b.Fifteen days after final termination, and after thirty days' written notice to all parties
• c.Immediately, so long as the broker records the reasons for the decision in the file
• d.Never, because only a written release from all parties or a court order will do

Rule 605:10-13-3(a) sets the default: the broker "shall continue to retain said money or valuables in escrow until he or she has a written release from all parties consenting to its disposition or until a civil action is filed to determine its disposition," and may also interplead the funds. Subsection (b) then supplies a safe harbor the last option overlooks: "in the absence of a pending civil action and upon the passage of thirty (30) days from the date of final termination of the contract, it shall not be considered grounds for disciplinary action by the Commission against a broker for a broker to disburse escrow monies or valuables to either purchaser or seller when the disbursement has been based on a good faith decision by the broker that the opposite party has failed to perform as agreed, such disbursement to be made, however, only after fifteen (15) days written notice to all parties concerned setting forth the broker's proposed action." Thirty days then fifteen, in that order — reversing the two figures gets the sequence wrong, and disbursing at once decides the dispute the broker has no authority to decide.