A California broker employs 15 salespersons. The DRE conducts a routine audit and discovers multiple trust fund violations across several salespersons' transactions. Under California law, which of the following best describes the broker's exposure?
Correct Answer
A) The broker may face license suspension or revocation for failure to establish and maintain a reasonable system of supervision over trust fund handling
Under California Business and Professions Code §10159.2 and Commissioner's Regulations §2725, a broker must establish policies, rules, procedures, systems, and a system of review and oversight to supervise salespersons' handling of trust funds. Widespread trust fund violations across multiple salespersons indicate a systemic failure of supervision, which is grounds for license suspension or revocation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created when a principal's actions or words lead a third party to reasonably believe that an agent has authority, and the principal fails to correct this belief.
An agency relationship created when a principal approves or accepts an agent's previously unauthorized actions, effectively granting authority after the fact.
The legal requirement for real estate agents to inform all parties about who they represent in a transaction, typically provided at first substantive contact.
More Laws Of Agency Fiduciary Duties Questions
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