Broker Frank in Camden receives a buyer's earnest money deposit and deposits it into his properly maintained escrow trust account. The transaction closes successfully. At what point may Broker Frank withdraw his earned commission from the trust account?
Correct Answer
A) After the closing has occurred and the commission is no longer subject to any claim by the parties
Under New Jersey trust account rules, a broker may withdraw earned commission from the trust account after the transaction has closed and the commission is no longer subject to any dispute or claim by the parties. At closing, the commission becomes the broker's earned income and is no longer 'client funds,' so it must be promptly transferred out of the trust account to avoid commingling. The key trigger is the completion of the closing and the absence of any outstanding claims on the funds.
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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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