Broker Dan is handling a residential sale in Huron, South Dakota. Which of the following actions related to the trust account would NOT constitute a violation of South Dakota trust account rules under SDCL 36-21A?
Correct Answer
D) Maintaining a small broker-owned balance in the trust account to cover bank service charges
South Dakota trust account rules (SDCL 36-21A-81 through 36-21A-90) permit a broker to maintain a small broker-owned balance in the trust account for the sole purpose of covering bank service charges. This is a recognized exception to the prohibition on commingling and does not constitute a violation. The amount must be minimal and documented. All other options described represent clear violations of trust account rules.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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