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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?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

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 Reconcile only once a year
  3. C Let any agent withdraw funds freely
  4. D Regularly review and reconcile the trust account against bank statements, control who is authorized to handle it, and promptly correct any shortage or discrepancy

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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About this topic: Broker Supervision and Office Management

Broker supervision and office management questions cover the state's requirements for a designated or managing broker — office location, signage, branch offices, supervision of licensees and handling of transactions. This is one of 13 Broker (State Law) questions on broker supervision and office management, each with a full explanation on a single study page.

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