Kevin is a licensed broker at Northwest Homes. He completes a transaction and his designated broker, Linda, pays Kevin his commission split directly from the firm's client trust account rather than from the firm's operating account. Which of the following statements is most accurate regarding this payment?
Correct Answer
B) This is a violation because broker compensation must be paid from the firm's operating account, not the trust account
Under RCW 18.85 and WAC 308-124H, trust accounts must hold client funds (earnest money, deposits) and cannot be used to pay licensee compensation. Broker commissions must be paid from the firm's operating account after client funds have been properly disbursed or after a transaction closes. Using trust account funds to pay broker splits is a form of improper disbursement and a serious violation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Florida brokers are required to maintain transaction records and escrow records for a minimum of five years.
A tie-in arrangement is an illegal antitrust practice in which a seller conditions the purchase of one product or service on the buyer's agreement to purchase a separate product or service.
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.
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