Wisconsin Real Estate Broker Exam — All Questions

Wis. Admin. Code § REEB 18.031 (1) requires a firm to deposit real estate trust funds received by the firm or by licensees associated with the firm into a real estate trust account within:

• a.24 hours of receipt of the trust funds
• b.5 business days of receipt of the funds
• c.10 days of receipt of the trust funds
• d.48 hours of receipt of the trust funds✓

Subsection (1), captioned TIME OF DEPOSIT, requires deposit "within 48 hours of receipt of the trust funds," with an extension to the next 2 business days where funds arrive the day before a holiday or other day the depository institution is closed. A licensee who receives trust funds must promptly submit them to the firm under § REEB 18.031 (2). If the firm cannot deposit the funds it has one business day to forward them to a payee other than the firm or return them to the payer.

Client funds deposited in an interest-bearing common trust account earn interest. Under Wis. Admin. Code § REEB 18.031 (3) (a), who is the beneficial owner of that interest?

• a.The firm holding the account, minus any service charges and fees
• b.The examining board's real estate education fund
• c.The buyer who paid the earnest money into the account
• d.The department of administration, minus any service charges✓

Paragraph (3) (a) provides that client funds go into an interest-bearing common trust account and "the department of administration shall be the beneficial owner of the interest accruing to the account, minus any service charges. At no time may the firm remove or use the interest earned on such accounts." Wis. Stat. § 452.13 (2) (d) says the same thing. Where trust funds other than client funds are placed in an interest-bearing account under § REEB 18.031 (3) (b), the firm needs written authorization specifying how and to whom the interest is disbursed, and none of it may inure to the firm's benefit.

Under Wis. Admin. Code § REEB 18.033 (1), when must a firm open a real estate trust account?

• a.Before the firm's broker license is first issued
• b.When the firm associates its first salesperson
• c.If the firm receives real estate trust funds✓
• d.Only if the firm manages residential rentals

Subsection (1) reads: "A firm shall open a real estate trust account if the firm receives real estate trust funds." Receipt of the funds is the trigger, not licensure, staffing, or line of business. Subsection (2) is the mirror image: a firm may close a real estate trust account if no real estate trust funds remain in it, or for the reasons specified in § REEB 18.035.

Wis. Admin. Code § REEB 18.034 (1) requires a firm to name its real estate trust account with the name on the broker's license or a trade name filed with the department, and to include which words in the account name?

• a.trust account✓
• b.escrow account
• c.client account
• d.broker account

Subsection (1), captioned NAME ON TRUST ACCOUNT, requires the firm to "include the words 'trust account' in the name of the account." Subsection (2) then requires the firm to imprint the name of the real estate trust account on the account's checks, share drafts or drafts. The trade name option cross-references § REEB 23.03, which requires the firm to notify the department in writing of a trade name before doing business under it.

After opening a real estate trust account, within how many days must a firm give the department the account name and number and the name of the depository institution, under Wis. Admin. Code § REEB 18.035 (1)?

• a.No later than 30 days
• b.No later than 5 days
• c.No later than 10 days✓
• d.No later than 60 days

Subsection (1) requires the firm, "[n]o later than 10 days after opening any real estate trust account," to give the department the account name and number, the depository institution, and whether the account holds client funds or other trust funds. The same 10-day clock in § REEB 18.035 (2) covers a change of account name or number, a move to another depository institution, a closing, or a switch to or from an interest-bearing common trust account. Section REEB 18.036 attaches two more 10-day duties on opening: the firm's examination authorization and the depository institution's certification.

Wis. Admin. Code § REEB 18.037 requires the notification and authorization called for by §§ REEB 18.035 and 18.036 to be given on a department form designated:

• a.notice of real estate trust account opening
• b.real estate trust account registration form
• c.consent to examine and audit trust account✓
• d.authorization to disburse trust account funds

Section REEB 18.037 provides that the firm shall supply the information and authorization "on a form provided by the department. This form shall be designated 'consent to examine and audit trust account.'" The authorization it carries runs to the department for all of the firm's trust account records and to the department of administration for the interest-bearing common trust accounts holding client funds. Wis. Stat. § 452.13 (2) (b) 3. imposes the parallel statutory duty to furnish an examination and audit authorization letter.

Under Wis. Admin. Code § REEB 18.04, a firm may authorize another person to sign checks drawn on the firm's real estate trust account if that person is:

• a.bonded by the department
• b.a licensed salesperson
• c.an officer of the firm
• d.at least 18 years of age✓

Section REEB 18.04 permits a firm to authorize other persons to sign real estate trust account checks, share drafts or drafts "if the person is at least 18 years of age." The rule imposes no licensure, corporate office, or bonding condition; age is the whole of it. The firm remains responsible for the account under § REEB 18.13, and a licensee who issues a check on a trust account containing insufficient funds violates § REEB 24.15.

Wis. Admin. Code § REEB 18.05 requires a licensee who receives earnest money from a buyer to indicate receipt of that earnest money:

• a.on a separate department receipt form given to the buyer
• b.in the firm's cash journal, before the end of the same day
• c.on the closing statement prepared for the settlement agent
• d.on the offer to purchase, at the time the offer is drafted✓

Section REEB 18.05 reads: "A licensee shall indicate on the offer to purchase the receipt of earnest money received from a buyer at the time the offer is drafted." The WB-11 implements it at line 57: "If the Offer was drafted by a licensee, receipt of the earnest money accompanying this Offer is acknowledged." The cash journal entry required by § REEB 18.13 (1) is a separate bookkeeping duty, not the receipt this rule calls for.

The parties want an escrow agent other than the firm to hold the earnest money. Under Wis. Admin. Code § REEB 18.06, the escrow agreement must be drafted by:

• a.the licensee, using a form approved by the board
• b.the parties or an attorney, not the licensee✓
• c.the escrow agent named in the agreement
• d.the firm's supervising broker of record

Section REEB 18.06 states that in that situation "the licensee may not draft the escrow agreement. The escrow agreement shall be drafted by the parties or an attorney," and the firm may neither hold the funds in its trust account nor act in any way as custodian of them. The rule names a bank, a savings and loan association, a credit union or an attorney as examples of the third party who holds instead. After-closing escrows are treated differently: under § REEB 18.07 (1) a licensee may draft the agreement if the board has approved a form for that purpose under § REEB 16.03.

A firm intends to disburse trust funds on an authorization granted within the contract and knows one party disagrees. Under Wis. Admin. Code § REEB 18.09 (2), after sending the required certified-mail notice, the firm may not disburse until:

• a.30 days after the date on which the notice is sent✓
• b.60 days after the date on which the notice is sent
• c.the disagreeing party withdraws the objection
• d.10 days after the date on which the notice is sent

Subsection (2) requires notice by certified mail to the parties' last known addresses stating to whom and when the disbursement will be made, and provides that "[t]he disbursement may not occur until 30 days after the date on which the notice is sent." Waiting for the objecting party to relent is not the rule; the notice period runs and the firm may then disburse. Commissions are handled separately under § REEB 18.09 (3) (a), which requires the firm to withdraw earned commissions or fees within 24 hours after a transaction is consummated or terminated.

Wis. Admin. Code § REEB 18.10 (1) (b) permits a firm to deposit and maintain personal funds in a real estate trust account, specifically identified to cover service charges, in a sum not to exceed:

• a.$500.00
• b.$1,000.00
• c.$100.00
• d.$300.00✓

Paragraph (1) (b) allows a firm to "deposit and maintain a sum not to exceed $300.00 from personal funds in any real estate trust account," specifically identified and deposited to cover service charges relating to that account. Subsection (2) then requires the firm to top the cushion back up, within 10 business days after notice from the depository institution that a service charge was assessed and insufficient personal funds were available. Every other mixing of personal or other funds into the trust account is prohibited commingling under § REEB 18.10 (1) (a).

Under Wis. Admin. Code § REEB 18.13 (3), how often must a firm reconcile its real estate trust account in writing?

• a.Each month, except where there was no activity that month✓
• b.Each week, except where no checks were written that week
• c.Each quarter, except where the account balance is zero
• d.Each year, before the firm's license renewal is filed

Subsection (3), captioned ACCOUNT RECONCILIATION, requires the firm or its designee to "reconcile the real estate trust account or accounts in writing each month except in the case where there has been no activity during the month." The written reconciliation must show the ending account statement balance, deposits in transit, outstanding checks by number and amount, and the reconciled ending balance. Section REEB 18.13 (4) requires a written trial balance of open items in conjunction with it, and § REEB 18.13 (5) requires the firm to validate that the reconciliation, the open ledger listing and the journal running balance agree.