Wisconsin Real Estate Salesperson Exam — All Questions

The principle of contribution states that the value of a component or improvement is measured by:

• a.The raw number of square feet of floor area or land area that the improvement happens to occupy
• b.The owner's personal emotional attachment to and sentimental feelings about that improvement
• c.Its original construction or installation cost in every case, dollar for dollar, with no exception
• d.How much it adds to the overall value of the property, not its cost✓

Under contribution, an improvement is worth the amount it adds to the whole property's market value, which may be more or less than its cost. This principle explains why some renovations do not fully return their expense, a key point in over-improvement analysis.

Under Internal Revenue Code Section 121, a qualifying homeowner may generally EXCLUDE from taxable capital gain:

• a.Up to $250,000 of gain if single, or $500,000 if married filing jointly✓
• b.Up to a full one million dollars of gain on any property at all, at any time and any frequency
• c.All gain on any and every investment or rental property the taxpayer happens to own and sell
• d.Absolutely nothing, because gain on the sale of a home is always fully and entirely taxable

Section 121 lets homeowners who owned and used the home as their principal residence for at least two of the prior five years exclude up to $250,000 of gain (single) or $500,000 (married filing jointly). It applies to a primary residence, not to investment property.

Depreciation recapture on the sale of investment real estate means that:

• a.All of the depreciation deductions previously claimed are simply refunded to the investor in cash
• b.The investor is legally required to physically restore and rebuild the depreciated building itself
• c.Gain from prior depreciation may be taxed, often at a special rate✓
• d.No income tax is ever owed at all on the sale of a property that has previously been depreciated

When depreciated property is sold at a gain, the portion of gain due to depreciation deductions is 'recaptured' and taxed under special rules, reflecting the earlier tax benefit. It is a tax concept, not a requirement to rebuild, and it increases, not eliminates, tax on sale.

Which appraisal approach is generally MOST reliable for a special-purpose property, such as a church or public school, that rarely sells and earns no market income?

• a.The sales comparison approach, which depends on recent sales of similar comparable properties
• b.The income approach, which converts a property's market rental income into an indicated value
• c.The gross rent multiplier method, which relies on typical market rents that these lack entirely
• d.The cost approach✓

Special-purpose properties have few or no comparable sales and generate no market rent, so the cost approach (replacement cost new, less depreciation, plus land) is typically most reliable. Sales comparison lacks comparables and the income/GRM methods need market income these properties do not produce.

The four characteristics an item must have to possess value in the market, often remembered as DUST, are:

• a.Debt, Utility, Supply, and Taxes, a mix of unrelated financing and cost terms rather than value
• b.Demand, Utility, Scarcity, and Transferability✓
• c.Depreciation, Use, Sale, and Title, which describe stages of ownership rather than value itself
• d.Demand, Ownership, Scarcity, and Time, which swaps in two terms that are not part of the concept

For something to have market value it must have Demand (buyers who want it), Utility (usefulness), Scarcity (limited supply), and Transferability (the ability to convey it). The DUST acronym captures these four essentials of value.

A form of co-ownership in which two or more owners each hold an undivided interest with the right of survivorship is known as:

• a.Tenancy in common
• b.Ownership in severalty
• c.A leasehold estate
• d.Joint tenancy✓

In a joint tenancy, co-owners hold equal, undivided interests and enjoy the right of survivorship: when one joint tenant dies, that share passes automatically to the surviving joint tenants rather than to heirs. Tenancy in common has no survivorship, and ownership in severalty is ownership by one person alone.

A city's authority to enact zoning ordinances that regulate how land may be used comes primarily from its:

• a.Power of eminent domain
• b.Power of escheat
• c.Power of taxation
• d.Police power✓

Zoning, building codes, and other land-use regulations are exercises of the government's police power: the inherent authority to enact rules that protect public health, safety, and general welfare. Eminent domain is the power to take private property for public use with compensation; escheat returns property to the state when an owner dies without heirs.

Which approach to value is generally the most reliable for appraising a single-family, owner-occupied home?

• a.The income approach
• b.The gross rent multiplier method
• c.The sales comparison approach✓
• d.The cost approach only

The sales comparison approach compares the subject property to recently sold, similar properties and adjusts for differences. Because ample comparable sales usually exist for residential homes, it best reflects what a buyer would pay. The income approach suits rental and investment property, while the cost approach is most useful for new or special-purpose buildings.

A mortgage clause that lets the lender demand full repayment of the loan balance if the borrower sells or transfers the property is a(n):

• a.Defeasance clause
• b.Prepayment clause
• c.Subordination clause
• d.Alienation (due-on-sale) clause✓

An alienation clause, also called a due-on-sale clause, allows the lender to call the entire balance due when the property is transferred, preventing an unqualified buyer from assuming the loan. A defeasance clause requires the lender to release the lien when the debt is paid in full.

Under which legal doctrine must a contract for the sale of real estate be in writing to be enforceable?

• a.The parol evidence rule
• b.The doctrine of laches
• c.The statute of frauds✓
• d.The statute of limitations

The statute of frauds requires certain contracts, including those for the sale of an interest in real estate, to be in writing and signed to be enforceable. The parol evidence rule limits use of outside evidence to change a written contract, and laches concerns unreasonable delay in asserting a right.

A seller receives a buyer's offer and responds by changing the closing date and price. The seller's response is best described as a(n):

• a.Acceptance that forms a binding contract
• b.Option to purchase
• c.Novation of the contract
• d.Counteroffer that terminates the original offer✓

Changing any material term of an offer creates a counteroffer, which rejects and terminates the original offer. The original offeror (the buyer) is then free to accept, reject, or counter again. Only an unqualified acceptance of all terms forms a binding contract.

An agreement that gives a prospective buyer the right, but not the obligation, to purchase a property at a set price within a stated period in exchange for consideration is a(n):

• a.Assignment
• b.Exclusive listing
• c.Option contract✓
• d.Land contract

An option is a unilateral contract in which the optionor (owner) gives the optionee the right to buy within a set time for agreed consideration. The optionee may choose whether to exercise the option; the owner is bound to sell only if the option is exercised.

An agent's fiduciary duty to place the principal's interests above the agent's own and to avoid conflicts of interest is the duty of:

• a.Loyalty✓
• b.Accounting
• c.Disclosure
• d.Reasonable care

Loyalty requires the agent to act solely in the principal's best interest and avoid self-dealing or conflicts of interest. Accounting concerns safeguarding and reporting the principal's money and property; disclosure requires sharing material facts. These are commonly summarized by the acronym OLD CAR.

An agency relationship that is created by the conduct of the parties rather than by a written or spoken agreement is a(n):

• a.Express agency
• b.Designated agency
• c.Dual agency
• d.Implied agency✓

Implied agency arises from the actions and conduct of the parties, even without a formal contract, when a person reasonably relies on another to act as their agent. Express agency, by contrast, is created by a written or oral agreement that states the relationship.

Federal law requires sellers and landlords to disclose known lead-based paint hazards for residential housing built before:

• a.1968
• b.1988
• c.1978✓
• d.1992

The federal Residential Lead-Based Paint Hazard Reduction Act requires disclosure of known lead-based paint and hazards, and delivery of an EPA pamphlet, for target housing built before 1978, the year residential lead paint was banned. Buyers must generally be given a 10-day period to test for lead.

Which type of deed offers the grantee the greatest protection by warranting the title against all defects, even those arising before the grantor owned the property?

• a.Quitclaim deed
• b.Special warranty deed
• c.General warranty deed✓
• d.Bargain and sale deed

A general warranty deed contains the full set of covenants, warranting the title against defects arising at any time in the property's history, and is the strongest deed for the grantee. A special warranty deed covers only the grantor's period of ownership, and a quitclaim conveys only whatever interest the grantor may have, with no warranties.

The federal Fair Housing Act prohibits discrimination in housing based on all of the following EXCEPT:

• a.Religion
• b.National origin
• c.Occupation✓
• d.Familial status

The Fair Housing Act protects seven classes: race, color, religion, sex, national origin, familial status, and disability. Occupation is not a protected class under federal law. Note that many states and localities add protected classes such as age, marital status, or source of income.

Directing prospective buyers toward or away from particular neighborhoods based on their race or other protected class is an illegal practice known as:

• a.Blockbusting, which is legal with disclosure
• b.A permitted marketing strategy
• c.A RESPA requirement
• d.Steering, which is prohibited by fair housing law✓

Steering is guiding buyers toward or away from neighborhoods based on a protected characteristic, limiting their housing choices. It violates the Fair Housing Act. Blockbusting (inducing panic selling) and redlining (denying loans by area) are separately prohibited practices.

In which type of lease does the tenant pay a fixed rent while the landlord pays the property taxes, insurance, and maintenance?

• a.Gross lease✓
• b.Net lease
• c.Percentage lease
• d.Ground lease

Under a gross lease the tenant pays a flat rent and the landlord covers the operating expenses such as taxes, insurance, and maintenance. In a net lease the tenant pays some or all of those expenses in addition to base rent, and a percentage lease ties rent partly to the tenant's sales.

A home sells for $300,000 and the total real estate commission is 6% of the sale price. What is the total commission?

• a.$1,800
• b.$18,000✓
• c.$15,000
• d.$24,000

Commission equals sale price multiplied by the rate: $300,000 x 0.06 = $18,000. Be careful to convert the percentage to a decimal (6% = 0.06). This $18,000 is the total paid to the brokerages before any split between the listing and selling sides.

A property has a market value of $250,000 and is assessed at 40% of value. If the tax rate is $2.50 per $100 of assessed value, what is the annual property tax?

• a.$2,500✓
• b.$6,250
• c.$1,000
• d.$10,000

First find assessed value: $250,000 x 0.40 = $100,000. Then divide by 100 to get the number of tax units: $100,000 / 100 = 1,000. Multiply by the rate: 1,000 x $2.50 = $2,500. Always apply the assessment ratio before the tax rate.

Wisconsin real estate licensing is governed by Chapter 452 of the Wisconsin Statutes and regulated by the Real Estate Examining Board within the:

• a.Department of Safety and Professional Services (DSPS)✓
• b.U.S. Department of Housing and Urban Development
• c.National Association of REALTORS
• d.Department of Motor Vehicles

The Wisconsin Real Estate Examining Board, part of the Department of Safety and Professional Services (DSPS), licenses and regulates salespersons and brokers under Chapter 452 of the Wisconsin Statutes and the REEB administrative rules.

In Wisconsin, a licensed salesperson may conduct real estate brokerage activities only when:

• a.Working completely independently
• b.Employed by or associated with a licensed broker✓
• c.Ten or more years have passed
• d.Paid only in cash

A Wisconsin salesperson must be associated with and supervised by a licensed broker and may provide brokerage services only through that broker. The salesperson is compensated by the broker, not directly by clients.

Wisconsin real estate transactions commonly use standardized forms approved for state use, known as the:

• a.WB forms✓
• b.MLS forms
• c.HUD forms
• d.NAR forms

Wisconsin licensees use standardized, state-approved 'WB' forms (such as the WB-1 listing and WB-11 residential offer to purchase) for many transactions. These approved forms help licensees complete transactions consistently within the limits of their license.

Under Wis. Stat. 452.133, a Wisconsin licensee owes duties to all parties to a transaction, including the duty to disclose to each party:

• a.Nothing about the property
• b.Material adverse facts the licensee knows✓
• c.The internal commission split
• d.The other party's personal motivation

Wisconsin Statute 452.133 sets duties a licensee owes to all parties, such as acting honestly and in good faith, and disclosing to each party material adverse facts that the licensee knows and that the party does not and could not discover through reasonable inspection.

In Wisconsin, a firm may provide brokerage services to more than one party in the same transaction (multiple representation) only with the:

• a.Approval of the Examining Board
• b.Written consent of the parties✓
• c.Verbal consent of one party
• d.Consent of the multiple listing service

Wisconsin permits a firm to represent more than one party in a transaction only when the parties give written consent after disclosure. Multiple representation limits how the firm can advocate for each client and requires protecting each party's confidential information.

Wisconsin law generally requires the seller of residential property of one to four units to provide the buyer a:

• a.Real Estate Condition Report (RECR)✓
• b.title insurance policy paid by the seller
• c.boundary survey
• d.appraisal report

Wisconsin's Real Estate Condition Report (RECR) requires most sellers of residential property of one to four dwelling units to disclose known conditions and defects to the buyer. The report helps buyers learn about the property's condition before closing.

Trust or escrow funds a Wisconsin broker holds for clients must be:

• a.Kept in the broker's business operating account
• b.Held in a separate trust account and not commingled✓
• c.Kept as cash in the office
• d.Held personally by the salesperson

Wisconsin brokers must hold client funds such as earnest money in a separate trust account, keeping them apart from the broker's own money. Commingling or misusing trust funds violates Chapter 452 and REEB rules and can result in discipline.

Wisconsin salesperson and broker licenses are renewed on a biennial cycle ending:

• a.Monthly
• b.December 14 of even-numbered years✓
• c.every leap year
• d.annually on July 1

Wisconsin real estate salesperson and broker credentials renew biennially, with the renewal deadline of December 14 of each even-numbered year set under Wis. Stat. 440.08. Licensees must complete required continuing education for the period to renew on active status. Confirm current continuing education hours with DSPS.

An unlicensed Wisconsin investor buys and resells houses on her own account. Under Wis. Stat. 452.01 (2) (b), how many sales or exchanges in one year are presumptive evidence that she is engaged in a pattern requiring a broker's license?

• a.Three sales or exchanges in one year, or 6 in 5 years
• b.Four sales or exchanges in one year, or 8 in 5 years
• c.Five sales or exchanges in one year, or 10 in 5 years✓
• d.Seven sales or exchanges in one year, or 12 in 5 years

Section 452.01 (2) (b) sweeps in a person engaged in selling or exchanging real estate to the extent that a pattern is established, whether or not the person owns the real estate, and fixes the presumption at 5 sales or exchanges in one year or 10 in 5 years. Cite: Wis. Stat. 452.01 (2) (b).

How is the Wisconsin Real Estate Examining Board composed?

• a.Nine members, all of whom must be licensed real estate brokers
• b.Five members: three licensees and two public members
• c.Seven members: three licensees and four public members
• d.Seven members: five licensees and two public members✓

Section 15.405 (11m) creates the board in the Department of Safety and Professional Services with 7 members on staggered 4-year terms: 5 must be real estate brokers or salespersons licensed in this state and 2 are public members. No member may serve more than 2 terms. Cite: Wis. Stat. 15.405 (11m).

A Wisconsin resident holds himself out as a real estate salesperson without any license. What penalty does Wis. Stat. 452.17 (1) authorize?

• a.A civil forfeiture only, capped at $1,000 per transaction
• b.A fine of up to $5,000, up to 6 months in jail, or both✓
• c.A fine of up to $25,000 and a felony conviction
• d.A written reprimand from the board and nothing further

Section 452.17 (1) makes unlicensed practice prosecutable by the district attorney or the attorney general and allows a fine of not more than $5,000 or imprisonment for not more than 6 months or both. Section 452.17 (3) applies the same range to other violations of the chapter. Cite: Wis. Stat. 452.17 (1).

Besides reprimanding, limiting, suspending or revoking a license, what monetary penalty may the Real Estate Examining Board assess against a licensee?

• a.Restitution to the complaining party, but no forfeiture
• b.A forfeiture of not more than $1,000 for each violation
• c.A forfeiture of not more than $5,000 for each violation✓
• d.A forfeiture of not more than $10,000 for each violation

Section 452.14 (4m) (a) lets the board assess a forfeiture of not more than $5,000 for each violation enumerated in sub. (3), in addition to or in lieu of discipline, and sub. (4m) (b) lets it order extra education or training. Cite: Wis. Stat. 452.14 (4m) (a).

A Wisconsin licensee is found to have intentionally discouraged buyers from purchasing in a particular area on the basis of race. What does Wis. Stat. 452.17 (4) (a) require for a FIRST offense?

• a.Suspension of the license for not less than 90 days✓
• b.Suspension of the license for not less than 30 days
• c.Immediate revocation of the license
• d.A written reprimand and mandatory fair housing training

Racial steering violates s. 452.14 (3) (jm), and s. 452.17 (4) (a) 1. requires the board to suspend the license for not less than 90 days for a first offense and, under subd. 2., to revoke it for a second. The penalty may be imposed on top of any other under the chapter or ss. 66.1011 or 106.50. Cite: Wis. Stat. 452.17 (4) (a).

A Wisconsin broker's license is revoked for a second racial steering offense under Wis. Stat. 452.17 (4) (a) 2. How soon may a new license be issued to that person?

• a.After one year, if the board is satisfied the person is rehabilitated
• b.After two years, on proof of continuing education
• c.Never; that revocation is permanent
• d.Not less than 5 years, as the board determines✓

Section 452.15 (1) bars a new license to a person whose license has been revoked until a period the board determines in each case; where the revocation was under s. 452.17 (4) (a) 2., that board-set period may not be less than 5 years from the date the revocation became finally effective. Cite: Wis. Stat. 452.15 (1).

Within what period must a buyer commence a civil action against a Wisconsin firm over an act or omission relating to brokerage services?

• a.Six years after the date of the act or omission
• b.Three years after the buyer discovers the injury
• c.Two years after the earliest of closing or termination✓
• d.There is no limit; the general contract statute of limitations governs

Section 452.142 (1) requires such an action to be commenced within 2 years after whichever occurs first: the transaction is completed or closed, the agency agreement is terminated, or an unconsummated transaction is terminated or expires. Sub. (2) forbids shortening it by agreement, and sub. (3) exempts board discipline. Cite: Wis. Stat. 452.142.

A Wisconsin salesperson wants to keep a second affiliation with another brokerage on weekends. What does the law permit?

• a.Nothing; only one firm at a time for a salesperson✓
• b.Two firms, if each firm consents to the other in writing
• c.Two firms, if the salesperson notifies the department of both
• d.Any number of firms, so long as one is designated supervising

Section 452.30 (7) (a) allows a salesperson to be associated with only one firm at a given time, and sub. (7) (b) bars a salesperson from independent practice altogether. Only a broker may hold a second affiliation, and only through independent practice under sub. (6) or as a business representative. Cite: Wis. Stat. 452.30 (7).

A Wisconsin firm hires an assistant who schedules showings, files paperwork and answers the phone. When is a license required?

• a.Whenever the assistant is paid any share of a transaction commission
• b.Never, if the work stays purely administrative or clerical✓
• c.Whenever the assistant speaks with a buyer by telephone
• d.Always, because the assistant works for a licensed firm

Section 452.03 (2) exempts an individual who, on behalf of and under the direction of a firm or its licensees, provides services limited to those that are purely administrative, clerical or personal. Section 452.34 then requires a written agreement with the firm and bars the assistant from working an open house without a licensee present. Cite: Wis. Stat. 452.03 (2).

Which duty does a Wisconsin firm owe ONLY to its clients, and not to every party in the transaction?

• a.The duty to safeguard trust funds and other property held
• b.The duty to keep confidential information confidential
• c.The duty to disclose material adverse facts in writing
• d.The duty to negotiate on behalf of the person✓

The duties owed to all parties under s. 452.133 (1) include honest and fair service, reasonable skill and care, timely written disclosure of material adverse facts, confidentiality, market information, safeguarding trust funds, and objective presentation of proposals. The duty to negotiate appears only in s. 452.133 (2) (d), among the additional duties to clients. Cite: Wis. Stat. 452.133 (1) and (2) (d).

Under Wis. Stat. 452.133 (6), which duty may a Wisconsin client waive?

• a.The duty of loyalty to the client's interests
• b.The duty to keep the client's information confidential
• c.The duty to negotiate on the client's behalf✓
• d.The duty to disclose material adverse facts

Section 452.133 (6) makes the duties under subs. (1), (2) (a), (am), (b) and (c), (4) and (5) non-waivable. Only the duty to negotiate under sub. (2) (d) may be waived, and only if the firm first gives the client a written disclosure quoting sub. (2) (d) and s. 452.01 (5m) and warning that an attorney or other provider may be needed. Cite: Wis. Stat. 452.133 (6).

A Wisconsin firm is showing property to a buyer who has signed nothing. May the firm negotiate the purchase for that buyer?

• a.No, unless the buyer is the firm's client or a principal's client✓
• b.Yes, because a firm may serve any party without an agency agreement
• c.Yes, if the firm first delivers the statutory disclosure to customers
• d.No, unless the listing firm consents to the negotiation in writing

Section 452.134 (1) (a) does let a firm provide brokerage services to any party with or without an agency agreement, but sub. (1) (b) draws the line at negotiating: a firm may not negotiate on behalf of a party unless that party is the firm's client or a client of a principal firm that engaged the firm as a subagent. Cite: Wis. Stat. 452.134 (1).

A Wisconsin firm represents both the buyer and the seller and wants different agents to negotiate for each. What does designated agency require?

• a.Oral consent from each client, confirmed at closing
• b.Written consent from all of the firm's clients in the relationship✓
• c.Approval of the supervising broker and written notice to the board
• d.Written consent from the seller only, as the firm's first client

Section 452.134 (3) (a) bars a firm in a multiple representation relationship from engaging in designated agency unless all of the firm's clients in that relationship have consented in writing, and lets any client withdraw that consent by written notice to the firm at any time. Cite: Wis. Stat. 452.134 (3) (a).

A Wisconsin client in a multiple representation relationship refuses to consent to designated agency. How must the firm then proceed?

• a.It must withdraw from representing one of the two clients at once
• b.It may favor whichever client signed the agency agreement first
• c.It must refer the second client to an unaffiliated firm
• d.It may not put one client's interests ahead of another's✓

Section 452.134 (4) governs a multiple representation relationship without designated agency: if a client does not consent to designated agency or withdraws consent, neither the firm nor its licensees may place the interests of any client ahead of the interests of any other in the negotiations. Cite: Wis. Stat. 452.134 (4).

When must a Wisconsin firm give a client the statutory "Disclosure to Clients"?

• a.Not later than the time the firm enters into the agency agreement✓
• b.Within 3 business days after the agency agreement is signed
• c.At the first showing of any property to the client
• d.Not later than the time the client's offer is presented

Section 452.135 (2) (a) requires the firm to provide the written Disclosure to Clients no later than the time the firm enters into an agency agreement with the client. For one- to four-unit residential property, sub. (2) (b) also requires the firm to request the client's signed acknowledgment if the disclosure is not built into the agency agreement. Cite: Wis. Stat. 452.135 (2).

A Wisconsin principal firm engages another firm as a subagent. What does the subagent owe the principal firm's client?

• a.The same client duties the principal firm owes, including loyalty
• b.No duties at all, because the client has no agreement with the subagent
• c.The all-party duties, and no placing itself ahead of that client✓
• d.Only the duty to keep the client's information confidential

Section 452.133 (4) (a) gives a subagent the sub. (1) duties owed to all parties it serves, but not the sub. (2) client duties toward the principal firm's clients. Sub. (4) (b) still forbids the subagent from placing its own interests ahead of those clients or giving advice contrary to their interests. Cite: Wis. Stat. 452.133 (4).

A Wisconsin transaction closes and the firm's agency agreement ends. What happens to the confidential information the firm learned?

• a.It may be disclosed once the agency agreement terminates
• b.It must be kept confidential after the transaction is complete✓
• c.It may be disclosed to the firm's other clients but not to the public
• d.It must be kept confidential for 2 years after the closing date

Section 452.133 (1) (d) expressly requires the firm to continue keeping the information confidential after the transaction is complete and after the firm is no longer providing brokerage services to the party. The duty ends only if the law compels disclosure or the affected person authorizes it. Cite: Wis. Stat. 452.133 (1) (d).

A Wisconsin buyer's agent negotiating for a home phones the listing firm for the first time. When must the buyer agency relationship be disclosed?

• a.Only when the buyer's written offer is delivered
• b.Within 24 hours after the first substantive conversation
• c.Only if the listing firm asks who the licensee represents
• d.At the earliest of first contact, a showing, or any other negotiation✓

Section REEB 24.07 (8) (a) 2. requires a licensee acting as agent for a buyer of one- to four-family residential property, when negotiating directly with the seller or aware of an exclusive listing, to notify the seller or listing firm of the buyer agency relationship at the earlier of first contact where transaction information is exchanged, a showing of the property, or any other negotiation. Cite: Wis. Admin. Code REEB 24.07 (8) (a) 2.

A Wisconsin licensee repeats a misstatement about a property that the licensee invented. Is the seller-client liable for it?

• a.No, unless the client knew or should have known of it✓
• b.Yes, because the licensee is the client's agent in the transaction
• c.Yes, but only up to the amount of the commission earned
• d.No, because a client is never liable for a licensee's statements

Section 452.139 (2) (a) shields a client from liability for a misrepresentation made by the firm or its licensees unless the client knows or should have known of it, or the misrepresentation is one the licensee is repeating from the client. A client remains liable for misrepresentations the client makes. Cite: Wis. Stat. 452.139 (2).

A Wisconsin salesperson accepts an earnest money check on Monday morning. By when must the firm deposit it in a real estate trust account?

• a.By the end of the next banking day
• b.Within 48 hours of receipt of the trust funds✓
• c.Within 5 business days of receipt
• d.By the closing date stated in the offer

Section REEB 18.031 (1) requires a firm to deposit all real estate trust funds within 48 hours of receipt, extended to the next 2 business days when the depository institution is closed. Funds the firm cannot deposit must be forwarded to the payee or returned to the payer no later than one business day after receipt. Cite: Wis. Admin. Code REEB 18.031 (1).

How much of a Wisconsin firm's own money may be kept in its real estate trust account?

• a.None; any personal funds are unlawful commingling
• b.Up to $100, identified as a reserve for bank charges
• c.Up to $300, identified and deposited to cover service charges✓
• d.Up to one month's expected commissions on pending files

Section REEB 18.10 (1) bars commingling but carves out one exception: a firm may deposit and maintain a sum not to exceed $300.00 of personal funds in any real estate trust account, specifically identified and deposited to cover service charges on that account. Sub. (2) requires the firm to top it up within 10 business days of notice of a charge. Cite: Wis. Admin. Code REEB 18.10 (1) (b).