An audit finds a $25,000 shortage in an Ontario brokerage's trust account because trust money was mixed with the brokerage's operating funds over several months. Which TRESA duty did the brokerage breach?
Correct Answer
A) Keeping trust money separate from the brokerage's own money
TRESA s. 27(1) requires every brokerage to deposit trust money into a designated trust account and at all times keep it separate and apart from money belonging to the brokerage, so mixing it with operating funds breaches that duty. When a shortfall is found, O. Reg. 579/05 s. 14 requires the brokerage to notify the registrar immediately and deposit enough money to eliminate it.
Why This Is the Correct Answer
This answer is correct because TRESA s. 27(1) requires the brokerage to keep trust money separate and apart from its own money at all times. Mixing trust money with operating funds is precisely the breach that produced this shortage.
Why the Other Options Are Wrong
Deep Analysis of This Regulatory Compliance Question
Background Knowledge for Regulatory Compliance
Memory Technique
Exam Tip for Regulatory Compliance
Real World Application in Regulatory Compliance
Common Mistakes to Avoid on Regulatory Compliance Questions
Key Terms
More Regulatory Compliance Questions
During its monthly reconciliation, an Alberta brokerage determines that its trust account is short by $5,000. Under the RECA Rules, what must the brokerage do?
What legislation governs the licensing and regulation of real estate professionals in Alberta?
In Ontario, what is the minimum amount of errors and omissions insurance coverage required for registered real estate salespersons?
A British Columbia real estate licensee discovers that their client may be using the property purchase to launder money. What is the most appropriate immediate action?
In Alberta, what is the primary purpose of the Real Estate Assurance Fund administered by RECA?
- → During its monthly reconciliation, an Alberta brokerage finds trust funds that cannot be accounted for, and it has not yet determined how large the shortage is. Under Rule 89(1) of the RECA Rules, what must the broker do?
- → A strata management company in BC manages 50 strata corporations. Under RESA, what specific licensing and compliance obligations apply to this company?
- → Under TRESA, who is entitled to the interest earned on money a brokerage holds in its trust account?
- → Under the regulations made under Ontario's TRESA, what is the minimum professional liability insurance coverage for each registrant?
- → What is the minimum amount of professional liability insurance required for licensed real estate salespersons in Ontario under RECO regulations?
- → An Ontario brokerage receives a $50,000 deposit cheque in trust on a Friday evening. By when must it be deposited into the brokerage's real estate trust account?
- → A RECA Hearing Panel finds that a licensee's conduct was conduct deserving of sanction. The licensee disagrees with the decision. Under Alberta's Real Estate Act, what appeal route is available?
- → An Ontario brokerage's monthly trust account reconciliation reveals a $2,000 shortfall. What must the brokerage do?
- → A client gives conflicting identity information, and the salesperson now has reasonable grounds to suspect the transaction is linked to money laundering. What is the brokerage's reporting obligation to FINTRAC?
- → A brokerage's compliance officer finishes reviewing a transaction and concludes there are reasonable grounds to suspect money laundering. Under FINTRAC's guidance, when is the Suspicious Transaction Report due?
People Also Study
Real Property Law
60 questions
Contracts & Agreements
60 questions
Agency & Professional Ethics
60 questions
Mortgage & Real Estate Finance
60 questions
Related Study Resources
Helpful Resources
Previous Question
A brokerage's trust account is found to have a shortage of $15,000 during a RECO audit in Ontario. What is the most serious potential consequence for the brokerage?
Next Question
An Ontario brokerage determines that its trust account is short by $8,000. What does O. Reg. 579/05 under TRESA require the brokerage to do?