Rachel is a licensed Michigan salesperson working for Metro Realty. She receives an earnest money deposit of $5,000 from a buyer on a Friday afternoon. Under Michigan law, what is the proper procedure for handling this deposit?
Correct Answer
A) Rachel must promptly deliver the earnest money to her employing broker, who is responsible for depositing it into a separate trust account
Under Michigan Occupational Code Act 299 of 1980 and LARA-BPL regulations, the broker — not the salesperson — is legally responsible for maintaining a separate trust (escrow) account for client funds. When a salesperson receives earnest money, they must promptly deliver it to their employing broker. The broker then deposits the funds into a properly maintained trust account. Commingling trust funds with operating funds is a disciplinary violation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
More Practice Of Real Estate Questions
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