A Michigan broker is audited by the Bureau of Professional Licensing (BPL). The auditor discovers that the broker's trust account ledger shows a balance of $42,000, but the actual bank balance is only $38,000. The broker explains that a $4,000 commission was earned last week and she simply forgot to transfer it to the operating account. What violation is most likely present?
Correct Answer
D) Commingling, because earned commission funds were left in the trust account
Once a commission is earned and belongs to the broker, it must be promptly transferred out of the trust account into the operating account. Leaving earned broker funds in the trust account constitutes commingling — mixing the broker's own money with client funds held in trust. Under MCL 339.2512, the trust account must contain only funds belonging to clients, not the broker's earned income.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Price fixing is an illegal antitrust practice in which competing real estate brokerages agree to charge the same commission rates, fees, or other pricing for their services. It is a per se violation of the Sherman Antitrust Act.
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?
A responsible broker in Wyoming asks about a nonresident applicant provides home-state evidence. Which answer follows Wyoming law?
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