Under TREC rules, Broker Chen maintains a trust account for earnest money and property management deposits. During a TREC audit, the auditor discovers that the trust account has more money than the total of all client deposits. Under TREC rules, is this a problem?
Correct Answer
A) Yes, excess funds may indicate that broker personal or operating funds have been deposited into the trust account, which is a form of commingling
Under TREC rules, excess funds in a trust account (beyond the small amount allowed for bank charges) may indicate that the broker has deposited personal or operating funds into the trust account. This is reverse commingling and is a violation of trust account rules. The broker must be able to account for every dollar in the trust account.
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