A Washington real estate firm's trust account records are audited by the DOL and reveal that the account balance is $8,000 less than the total amount of client funds the firm is obligated to hold. The designated broker claims the shortage resulted from a bookkeeping error, not intentional theft. Which of the following best describes the designated broker's legal exposure?
Correct Answer
C) Potential license discipline and civil liability, because trust account shortages violate Washington law regardless of intent
Under RCW 18.85.361 and WAC 308-124D, maintaining accurate trust account records and ensuring the account is never short of client funds are non-delegable duties of the designated broker. A trust account shortage is a violation of Washington real estate law regardless of whether it resulted from intentional misconduct or negligent bookkeeping. The designated broker faces potential DOL disciplinary action (including license suspension or revocation) and civil liability to the affected clients. Intent affects the severity of consequences but does not eliminate liability.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A group boycott is an illegal antitrust practice in which two or more competing real estate businesses agree to refuse to work with a specific person, company, or entity in order to harm that party's ability to compete.
In real estate, the distinction between an independent contractor and an employee determines tax treatment, liability, and the level of control a broker may exercise over the agent's daily activities. Most real estate agents operate as independent contractors.
Florida real estate licenses must be renewed biennially, and sales associates have specific post-license education requirements for their first renewal.
More Practice Of Real Estate Questions
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