Broker Tom in Ann Arbor is managing a rental property for a landlord client. He collects $2,400 in monthly rent from a tenant and $800 in a security deposit. Tom deposits the security deposit into his general operating account along with his office receipts, but keeps the monthly rent in the trust account. Which statement best describes Tom's compliance with Michigan trust account requirements?
Correct Answer
A) Tom has violated trust account rules by depositing the security deposit into his operating account
Under MCL 339.2512 and Michigan property management standards, security deposits collected by a broker on behalf of a client must be held in a separate trust account, not commingled with the broker's operating funds. By depositing the security deposit into the operating account, Tom has violated Michigan trust account rules. The rent in the trust account is handled correctly, but the security deposit is not.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Commingling is the illegal act of mixing client trust funds with a broker's personal or business operating funds; conversion is the misappropriation of those funds.
Continuing education (CE) refers to the ongoing coursework that licensed real estate professionals must complete during each renewal cycle to maintain an active license. CE ensures agents stay current with changes in laws, regulations, and industry practices.
The National Do Not Call Registry is a federal program administered by the FTC that allows consumers to opt out of receiving unsolicited telemarketing calls, including calls from real estate agents soliciting business.
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