A broker holds $50,000 in escrow on behalf of multiple clients. A creditor obtains a judgment against the broker's brokerage for unpaid business debts. Under RELA and trust law principles, what is the creditor's ability to access the escrow funds?
Correct Answer
C) The creditor cannot access the escrow funds because they are client property held in trust, not brokerage assets
Under RELA and established trust law principles, escrow funds are held by the broker as trustee for the benefit of clients — they are client property, not brokerage assets. Because the funds do not belong to the broker or the brokerage, they are not subject to claims by the broker's business creditors.
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More Pa Rela Brokerage Rules Questions
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Previous Question
A licensed salesperson receives a buyer's $1,500 earnest money check on Monday morning. By Friday of the same week, the salesperson has not delivered the check to the broker. Under RELA, which statement best describes the salesperson's obligation regarding client funds?
Next Question
Under RELA, a Pennsylvania broker handles various types of funds in the course of real estate activities. All of the following must be deposited into the broker's escrow account EXCEPT: