Broker Noa has been operating a property management business in Hawaii, collecting rent and security deposits from tenants on behalf of multiple property owners. Under HRS Chapter 467 and HAR Title 16 Chapter 99, how must Noa handle these funds?
Correct Answer
B) Noa must deposit all client funds into a federally insured trust account separate from personal and business operating funds
Under HRS Chapter 467 and HAR Title 16 Chapter 99, all client funds — including rent, security deposits, and earnest money — must be deposited into a separate, federally insured trust account. This trust account must be maintained apart from the broker's personal funds and business operating funds. Commingling client funds with any other funds is a serious violation subject to license revocation.
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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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