A California salesperson's employing broker discovers that the salesperson has been depositing earnest money checks into a personal bank account instead of the broker's trust account. Under California law, which of the following best describes the broker's supervisory responsibility?
Correct Answer
D) The broker must have a system for supervising trust funds and may be disciplined for not having one
Supervision is the broker's own duty, not a consequence of what a salesperson did. A broker with no system for overseeing trust funds can be disciplined for that failure whatever the salesperson's instructions were. Other choices: acting against instructions does not discharge the duty to supervise, or the duty would mean nothing; actual knowledge is not the test, since the point is to catch what you do not yet know; and no prior DRE discipline is required first.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A practice where the agent or brokerage represents only one party in a transaction — either the buyer or the seller, but never both.
A relationship where a listing broker authorizes other brokers to act as agents of the seller, extending the seller's agency relationship to cooperating brokers.
A non-agency relationship where the broker facilitates a real estate transaction without representing either party, owing limited duties of honesty, fairness, and competence to both.
More Laws Of Agency Fiduciary Duties Questions
Under California law, the agency disclosure requirements apply to which types of property?
Under California law, when must a buyer's agent give the agency disclosure form to the buyer?
A broker who fails to promptly disclose their dual agency status is subject to:
A broker’s fiduciary obligation to protect a seller’s confidential information continues:
A broker has an exclusive agency listing on a property. If the owner sells the property, the broker is entitled to:
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