Broker Sandra's trust account at First Minnesota Bank holds earnest money deposits for multiple pending transactions. The bank notifies Sandra that her trust account has fallen below the minimum balance required by the bank to avoid monthly service fees. To avoid the fee, Sandra deposits $50 of her own personal funds into the trust account. Under Minnesota license law, how should this action be characterized?
Correct Answer
A) Permissible, because Minnesota law allows a broker to maintain a small amount of personal funds in the trust account to cover bank service charges
Under Minn. Stat. Ch. 82 and MN DOC guidance, a broker is permitted to keep a small amount of personal funds in the trust account solely for the purpose of covering bank service charges and maintaining the minimum balance required by the financial institution. This narrow exception to the commingling prohibition is recognized under Minnesota law to avoid penalizing brokers for unavoidable banking fees.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Broker supervision is the legal obligation of a designated or managing broker to oversee and be accountable for the real estate activities of all salespersons and associate brokers operating under their license.
Commingling is the illegal act of mixing client funds with a broker's personal or business operating funds, while conversion is the unauthorized use of client funds for the broker's own benefit. Both are serious violations that can result in license revocation.
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.
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