Broker Lisa in Bozeman, Montana operates as a sole proprietor without any affiliated salespersons. She enters into a listing agreement with a seller and collects an earnest money deposit of $8,000 from a buyer. Lisa is planning a two-week vacation and intends to keep the earnest money in her personal checking account until she returns. Under Montana law, which of the following is most accurate?
Correct Answer
B) Lisa must deposit the earnest money into a separate trust account promptly, regardless of her sole proprietor status or personal schedule.
Under MCA Title 37, Chapter 51 and related MBRR regulations, all brokers — including sole proprietors — are required to maintain a separate trust account and must deposit client funds, including earnest money, promptly into that trust account. Commingling client funds with personal funds in a personal checking account is a serious violation of Montana's trust account rules and constitutes grounds for license discipline, regardless of the broker's business structure or personal circumstances.
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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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