Salesperson Dana received a $5,000 earnest money deposit from a buyer. Dana's broker instructed her to hold the check at her home for two weeks before depositing it. Under Minnesota trust account requirements in Minn. Stat. Ch. 82, which of the following best describes the broker's instruction?
Correct Answer
B) The instruction is a violation because earnest money must be deposited into a trust account within three business days of receipt.
Under Minn. Stat. Ch. 82 and Minnesota Department of Commerce rules, earnest money and other client funds received by a licensee must be deposited into the broker's trust account within three business days of receipt. Holding a client's check at a personal residence for two weeks before depositing it violates this requirement and constitutes improper handling of client funds, which can result in disciplinary action against both the salesperson and the broker.
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Related Topics & Key Terms
Key Terms:
Related Concepts
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
A group boycott is an illegal antitrust practice in which two or more competing real estate businesses agree to refuse to work with a specific person, company, or entity in order to harm that party's ability to compete.
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.
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