Employing Broker Rachel manages a Colorado property management company. She collects $2,400 in monthly rent from a tenant on behalf of the property owner. Her management agreement entitles her to a 10% management fee. Under Colorado CREC rules, when may Rachel deduct her $240 management fee from the trust account?
Correct Answer
D) Only after providing the property owner with a written accounting and obtaining written authorization to disburse the fee
Under CREC rules and C.R.S. § 12-10-217, a property management broker may only disburse funds from the trust account — including their own management fees — after providing the property owner with a written accounting and receiving proper authorization to disburse. Unilaterally withdrawing fees from the trust account without a written accounting and authorization constitutes an unauthorized disbursement, which can rise to the level of conversion.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A tie-in arrangement is an illegal antitrust practice in which a seller conditions the purchase of one product or service on the buyer's agreement to purchase a separate product or service.
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.
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