Rachel is a Connecticut licensed real estate broker who operates her own brokerage. She discovers that one of her salespersons, David, has been collecting earnest money deposits from buyers and depositing them into David's personal bank account instead of the brokerage's trust account. Under Connecticut law, which of the following best describes the potential consequences?
Correct Answer
B) Both Rachel and David may face CREC disciplinary action, because the broker is responsible for supervising salespersons and maintaining proper trust account procedures
Under CGS Chapter 392, a Connecticut real estate broker has supervisory responsibility over all affiliated salespersons and is accountable for trust account compliance. Earnest money and other client funds must be deposited into the broker's designated trust account, not a personal account. When a salesperson mishandles funds, the supervising broker can face CREC disciplinary action for failure to supervise, in addition to David facing discipline for the actual mishandling. Both parties are exposed to sanctions including fines, suspension, or revocation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
A group boycott is an illegal antitrust practice in which two or more competing real estate businesses agree to refuse to work with a specific person, company, or entity in order to harm that party's ability to compete.
In real estate, the distinction between an independent contractor and an employee determines tax treatment, liability, and the level of control a broker may exercise over the agent's daily activities. Most real estate agents operate as independent contractors.
More Practice Of Real Estate Questions
In Wyoming real estate practice, an associate broker or salesperson is not associated with a responsible broker at renewal. What should the licensee remember?
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A Wyoming licensee is reviewing an out-of-state salesperson applicant prepares for testing. What is the best answer?
In Wyoming real estate practice, a salesperson applicant age is reviewed. What should the licensee remember?
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