Broker Rachel operates a property management company in Connecticut and collects monthly rent payments from tenants on behalf of multiple property owners. She deposits all rental income into a single trust account. At the end of the month, she pays herself a management fee directly from the trust account before disbursing the remaining funds to the property owners. Under Connecticut law, which of the following best describes Rachel's practice of paying herself from the trust account?
Correct Answer
B) This practice is permissible only if each property owner has provided written authorization in the management agreement
Under Connecticut trust account rules (CGS § 20-324e), a property manager may disburse management fees from the trust account only when the management agreement expressly authorizes such disbursement. If each property owner's management agreement provides written authorization for the broker to deduct fees from collected rents before remitting the balance, the practice is lawful. Without such written authorization, the deduction would be an unauthorized conversion of client funds.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Florida real estate licenses must be renewed biennially, and sales associates have specific post-license education requirements for their first renewal.
License requirements are the mandatory qualifications—including pre-licensing education, examination, and background checks—that a person must satisfy before legally practicing real estate. These requirements are established and enforced by each state's real estate commission.
Market allocation is an illegal antitrust practice in which competing real estate brokerages agree to divide markets among themselves by geographic area, property type, or price range, thereby eliminating competition.
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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In Wyoming real estate practice, a salesperson applicant age is reviewed. What should the licensee remember?
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