Rhode Island Real Estate Broker Exam — All Questions
4 questions
A Rhode Island broker holding client earnest money must:
- a.Keep it in the broker's personal account
- b.Hold it as cash in the office
- c.Loan it to the seller
- d.Deposit it in a separate escrow account and not commingle it with the broker's own funds✓
A broker must deposit client money such as earnest money into a separate escrow account and may not commingle it with the broker's own funds. Escrow handling and recordkeeping are broker responsibilities in Rhode Island, and mishandling escrow is a serious violation subject to discipline by the DBR.
Rhode Island requires its real estate licensees to carry which type of insurance?
- a.Errors and omissions (E&O) insurance✓
- b.Flood insurance on the brokerage office
- c.Life insurance on the broker
- d.No insurance is required
Rhode Island mandates that licensees carry errors and omissions (E&O) insurance (R.I.G.L. 5-20.5-27), which covers certain claims arising from professional real estate services. This mandatory-coverage requirement is a Rhode Island exam point that distinguishes it from states where E&O is optional.
If a dispute arises over earnest money held in a Rhode Island broker's escrow account, the broker should:
- a.Release the funds to whichever party asks first
- b.Keep the funds as a commission
- c.Retain the funds in escrow until the dispute is resolved by written agreement, court order, or another lawful basis✓
- d.Transfer the funds to the broker's operating account
When buyer and seller dispute earnest money, the broker must keep the funds in escrow and may not unilaterally decide the dispute or take the money. Disbursement waits for the parties' written agreement, a court order, or another lawful basis. Improper release or retention of disputed escrow funds is a disciplinary matter.
Mandatory E&O insurance for Rhode Island licensees primarily protects:
- a.The broker's personal vehicle
- b.Against certain claims arising from the licensee's professional real estate services✓
- c.The buyer's mortgage from default
- d.The property against fire loss
Errors and omissions insurance covers certain claims that arise from a licensee's professional real estate services, providing a layer of protection for consumers and licensees alike. It is not vehicle, hazard, or mortgage insurance. Rhode Island's requirement that licensees maintain E&O coverage is part of the state's consumer-protection scheme.