What is commingling?A methodical review of financial

Section 5: Key Areas of Concern in Real Estate Practice: Commingling and Conversion Flashcards What is commingling?A methodical review of financial accountsCombining trust funds with non-trust funds into one accountTelemarketing and other forms of canvassingUsing trust funds for purposes other than their intended use Combining trust funds with non-trust funds into one account Mixing escrow funds with personal fundsComminglingConversion Commingling Debra's listing agent, Raj, just called to tell her that he'd received an offer on her house and an earnest money check for $4,500. "I'm on my way over to go through the offer with you. I think you'll like it!" Debra's excited, and she knows exactly what she wants to spend that $4,500 on.What's wrong with Debra's thought process?Debra's forgetting that she owes part of these funds to her listing agent.She can't cash the earnest money check until the transaction closes.She hasn't seen the offer, so she doesn't know if she'll accept it and get the earnest money check.The earnest money doesn't belong to Debra. It will be held in an escrow account.The earnest money doesn't belong to Debra. It will be held in an escrow account.Earnest money belongs to the seller.(T/F) False Funds kept in escrow are released when the buyer, seller, and their mortgage lenders are satisfied that all _______ have been met.Due datesConditionsPaymentsParties Conditions Using escrow funds for unauthorized purposesComminglingConversion Conversion Martha and Jeb are making offers on several properties, hoping to get one. Because they're only looking for one property, it's acceptable for their brokerage firm to hold a single earnest money check to bind all the offers.(T/F) False What's another name for an escrow account?Closing fundLocked accountSavings accountTrust account Trust account It's illegal for licensees/escrow agents to engage in which two of the following activities with regard to escrow funds?CappingComminglingConversionConforming ComminglingConversion Earnest money funds are also referred to as escrow funds.(T/F) True Who's responsible for disbursing escrow funds at closing?The seller agentThe buyer agentThe escrow agentThe mortgage company The escrow agent

Which of the following statements about escrow accounts is correct?An escrow account is a temporary account that's opened for use with a single transaction and closed after the transaction closes.An escrow account is held by either the buyer or seller, and houses the buyer's earnest money until closing.Escrow accounts are managed by brokerage firms, and hold funds used to pay operating expenses and agent commissions.Escrow accounts are managed by escrow agents, and are used to hold funds belonging to others, such as earnest money deposits.Escrow accounts are managed by escrow agents, and are used to hold funds belonging to others, such as earnest money deposits.When the Transaction Doesn't CloseA failed transaction (one that doesn't make it to closing) is painful for everyone.What happens to the earnest money deposit when a transaction doesn't close?The escrow agent automatically returns it to the buyer.The escrow agent automatically disburses it to the seller.The funds are split between the brokerage firm and the buyer.The escrow agent disburses it as outlined in instructions from both parties or holds it until any disputes are resolved.The escrow agent disburses it as outlined in instructions from both parties or holds it until any disputes are resolved.When it comes to earnest money, which one of the following statements is true?Earnest money is rarely the subject of lawsuits against real estate licensees.Earnest money must be placed in a trust account.The amount of earnest money is non-negotiable between the buyer and seller.The seller dictates the amount of earnest money in the MLS listing.Earnest money must be placed in a trust account.We're going to begin this lesson on handling earnest money with a little scenario. Which two of these actions related to earnest money funds are true?Escrow funds must be deposited into your broker's primary personal account.You can't deposit earnest money into your personal account.You can't use earnest money or other trust funds for your own use.You can't deposit earnest money into your personal account.You can't use earnest money or other trust funds for your own use.Commingling is defined as _______.Keeping funds entrusted to a licensee in a separate trust account apart from personal/business fundsMaintaining others' funds in the same bank account where you keep personal/business fundsThe activity that takes place at an open houseTracking licensees' activities in conducting real estate business and handling trust funds Maintaining others' funds in the same bank account where you keep personal/business funds The buyer's broker must deposit the earnest money check immediately into the proper trust account.(T/F) False(Earnest money funds are typically deposited after the seller has accepted the offer.)