Broker Nora operates a Virginia brokerage and is the principal broker of record. She has designated her associate broker, David, as the sole signatory on the firm's trust account while she travels internationally for three months. During this period, David deposits all received funds correctly, but Nora does not review any trust account records or reconciliations for the entire three months. A VREB audit later reveals no missing funds but finds that Nora performed no oversight. Which statement most accurately describes Nora's regulatory exposure under Virginia law?
Correct Answer
D) Nora may face disciplinary action because the principal broker's supervisory duty over the trust account is non-delegable and cannot be fully transferred to another licensee
Under 18 VAC 135-20-160 and 18 VAC 135-20-180, the principal broker bears a non-delegable supervisory duty over the firm's trust account. While a broker may designate another licensee as a signatory for operational purposes, the principal broker cannot delegate away the ultimate responsibility to supervise, review, and ensure the proper maintenance of trust account records. Three months of zero oversight—even if no funds were misappropriated—constitutes a failure of broker supervision that the VREB may treat as a violation of the broker's supervisory obligations, regardless of the outcome.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.
Antitrust violations in real estate occur when competing brokerages or agents engage in practices that restrain trade, reduce competition, or harm consumers through collusion. These violations are governed by the Sherman Antitrust Act and can result in severe penalties.
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