Utah Real Estate Broker Exam — All Questions

On a closing statement, an item entered as a credit to the seller is one that:

• a.Increases the money the seller takes away from the closing✓
• b.Belongs on the buyer's side of the statement as a charge
• c.Cancels out against an equal debit on the buyer's side
• d.Reduces the money the seller takes away from the closing

A credit to a party increases what that party receives or reduces what that party must bring; a debit does the reverse. The seller's largest credit is the sale price itself, and a cost the seller prepaid that covers time after closing, such as prepaid taxes or an assessment, is also credited to the seller. Anything the seller owes at settlement, such as the payoff of a loan, unpaid taxes, or the brokerage fee, is a debit that reduces the seller's proceeds. A charge belonging to the buyer's financing sits on the buyer's side. And credits do not simply offset debits between the parties: many items appear on only one side of the statement, so the two columns are balanced within each party's own statement rather than against each other.

Property taxes are prorated on a Utah closing statement in order to:

• a.Move the tax obligation from the seller to the brokerage
• b.Charge the buyer the whole year's tax after the sale closes
• c.Divide the year's tax between the parties as of closing✓
• d.Cancel the tax for the calendar year in which the sale falls

Proration divides an ongoing cost so that each party bears the part attributable to the period that party owns the property, measured at the closing date. Amounts the seller prepaid that cover time after closing are credited to the seller and debited to the buyer; amounts accrued but unpaid at closing are credited to the buyer and debited to the seller. Utah taxes are assessed at fair market value as of January 1 under Utah Code Section 59-2-103(2) and are not due until November 30 under Section 59-2-1331(1)(a), which is exactly why a mid-year sale leaves an unpaid amount to be split. Proration does not cancel or reduce the tax, does not shift a full year to one party, and never moves the obligation to the brokerage, which neither owns the property nor is a party to the tax.

Rule R162-2f-401c makes the Utah principal broker responsible for seeing that final settlement statements are reviewed for content and accuracy:

• a.At or before the time of closing, whoever closes the deal✓
• b.Within 10 business days after the closing takes place
• c.Only where the brokerage holds the earnest money deposit
• d.Only where the brokerage itself conducts the closing

Rule R162-2f-401c(1)(c)(i) requires the principal broker, "regardless of who closes a real estate transaction," to ensure that final settlement statements are reviewed for content and accuracy "at or before the time of closing" by the principal broker, an affiliated associate or branch broker, or the sales agent who is affiliated with the broker and represents the principal in the transaction. The words regardless of who closes are what defeat the two options that would limit the duty to closings the brokerage runs or to deals where it holds the deposit, and the timing is before the money moves rather than in a review afterward. Subsection (1)(c)(ii) adds that the principals in each closed transaction must receive copies of each document executed at the closing.

Before paying a commission out of the real estate trust account, Rule R162-2f-403a requires a Utah principal broker to have done all of the following except:

• a.Filed a copy of the settlement statement with the division✓
• b.Moved the funds into the brokerage's own operating account
• c.Closed or otherwise terminated the underlying transaction
• d.Delivered the settlement statement to the buyer and seller

Rule R162-2f-403a(15) lists what must happen first: written authorization from the buyer and seller or other parties with an interest in the funds; closing or otherwise terminating the transaction; delivering the settlement statement to the buyer and seller; ensuring the party the broker represents has been paid the amount due as determined by that statement; making a record of each disbursement; and depositing the funds into the broker's operating account before disbursing further. Filing the statement with the division is not on the list; the division sees the records when it audits or investigates under Rule R162-2f-403a(10)(f). The last step is the one most often skipped, and it is why a commission check written directly on the trust account is a violation even where every party has agreed to the amount.

A Utah sale closes on April 30. The seller has already paid the full calendar-year tax of $3,600. Using a 360-day year with 30-day months and charging the buyer for the closing day, the buyer owes the seller:

• a.$2,400
• b.$2,410✓
• c.$1,200
• d.$1,190

The seller prepaid the whole year, so the buyer must reimburse the seller for the part of the year the buyer will own the property. On a 360-day year the daily rate is $3,600 divided by 360, or $10 per day. With the closing day belonging to the buyer, the buyer owns April 30 through December 31: that is one day in April plus eight full 30-day months, so 1 + 240 = 241 days. At $10 per day the reimbursement is $2,410, entered as a credit to the seller and a debit to the buyer. The $2,400 answer drops the closing day; $1,200 and $1,190 are the seller's own share, which is what the seller keeps rather than what the buyer pays. The Pearson VUE outline notes that a proration question will state whether to use 360 or 365 days and which party takes the closing day.

Utah Code Section 61-2f-308 defines when a transaction is "closed." All four of these must have happened, one of which is that:

• a.The title insurer has issued the final owner's policy
• b.The buyer has taken physical possession of the property
• c.The listing brokerage has been paid the agreed commission
• d.The applicable documents are recorded with the county✓

Section 61-2f-308(1)(c) defines "closed" to mean that the documents required to be executed under the contract are executed; the money required to be paid by either party is paid in the form of collected or cleared funds; the proceeds of any new loan are delivered by the lender to the seller; and "the applicable documents are recorded in the office of the county recorder for the county in which the real estate is located." Recording is the last of the four and is what makes the definition useful, because it fixes a date that does not depend on when keys change hands. Possession, payment of the commission, and issuance of the final title policy commonly follow, but none of them is an element. The definition matters under Subsection (2)(b), which releases a principal broker from the duties owed under an exclusive brokerage agreement once the transaction closes.

Rule R162-2f-401c requires a Utah principal broker to give a represented client a detailed statement showing the current status of a transaction at the earlier of a client demand or:

• a.60 days after an offer has been made and accepted
• b.15 days after an offer has been made and accepted
• c.30 days after an offer has been made and accepted✓
• d.45 days after an offer has been made and accepted

Rule R162-2f-401c(1)(b)(i) requires the principal broker to provide the person the broker represents "a detailed statement showing the current status of a transaction upon the earlier of: (A) the expiration of 30 days after an offer has been made and accepted; or (B) a buyer or seller making a demand for such statement." Subsection (1)(b)(ii) then requires an updated status statement at 30-day intervals "until the transaction either closes or fails." The duty runs from acceptance of the offer rather than from the listing date, and it is the broker's, not the individual agent's. It sits alongside the closing duties in Subsection (1)(c), which require the final settlement statements to be reviewed at or before closing and copies of the executed documents to reach the principals.