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
Under RELA, what is the primary purpose of requiring Pennsylvania brokers to maintain escrow accounts?
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- → During a routine reconciliation, a Pennsylvania broker discovers that the escrow account balance is less than the total of all client deposits currently being held. Under RELA, which of the following best describes the broker's obligation?
- → Under RELA, a Pennsylvania salesperson, Beth, is terminated by her brokerage after a dispute over commission splits. Beth has an active listing with a seller client. What happens to Beth's listing after termination?
- → Under RELA, a Pennsylvania salesperson, Eric, receives a $3,000 earnest money check from a buyer during a weekend showing. Eric's broker is on vacation and unreachable. What should Eric do with the check?
- → Under RELA, a Pennsylvania brokerage receives a written complaint from a consumer about one of its salespersons. The broker of record must take what immediate action?
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- → Under RELA, where must a Pennsylvania brokerage display its current real estate license?
- → Under RELA, when a Pennsylvania salesperson places their license with a new brokerage, the salesperson is said to be operating under the authority of which individual?
- → Under RELA, when a Pennsylvania salesperson terminates their affiliation with a brokerage, what happens to the salesperson's license?
- → Under RELA, a Pennsylvania broker of record, Sarah, is retiring and wants to close her brokerage. What steps must Sarah take regarding her affiliated salespersons?
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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?
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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: