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Real Estate · Broker Supervision and Office Management

What is a reasonable supervisory practice for a broker overseeing trust-account activity in the office?

Correct answer

Regularly review and reconcile the trust account against bank statements, control who is authorized to handle it, and promptly correct any shortage or discrepancy

  1. A Never look at the trust account
  2. B Regularly review and reconcile the trust account against bank statements, control who is authorized to handle it, and promptly correct any shortage or discrepancy
  3. C Let any agent withdraw funds freely
  4. D Reconcile only once a year

Why this is the answer

Because trust-fund mishandling is among the most serious and most disciplined violations, a supervising broker should oversee the trust account closely: reconciling it regularly (commonly monthly) against the bank statement, limiting and controlling who is authorized to deposit and disburse funds, maintaining accurate per-party ledgers, and investigating and correcting any shortage or discrepancy immediately. A shortage in a trust account — money owed to parties that is not there — is a red flag for commingling or conversion. State law sets specific requirements, but active broker oversight of the trust account is a practical expression of the duty to supervise, and the state broker portion tests these controls.
Source: Broker Supervision of Trust Accounts

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