California Real Estate SalespersonPractice of Real Estate and DisclosuresHard
According to DRE regulations, a broker may keep personal funds in the trust account for which specific purpose, and up to what amount?
- AUp to $500, to cover office operating expenses
- BUp to $1,000, to maintain a minimum balance requirement
- CUp to $200, to cover bank service charges on the account
- DNo personal funds may ever be kept in a trust account under any circumstances
Show answer & explanationAnswer & explanation
Correct answer: C. Up to $200, to cover bank service charges on the account
California law allows a broker to maintain up to $200 of personal funds in the trust account solely to cover bank charges such as service fees, preventing account shortages from bank fees rather than mixing broker funds with client money for other purposes. Any amount beyond this or for other purposes constitutes commingling.
Why the other options are wrong
- A. Office operating expenses cannot be covered from trust funds; that would be commingling.
- B. $1,000 exceeds the statutory limit, and 'minimum balance' is not the authorized purpose.
- D. A narrow exception exists for bank charges, so this overstates the rule.
Trust Account $200 Exception
A broker may keep up to $200 of personal funds in the trust account solely to cover bank service charges, without it being considered commingling.
- Purpose limited strictly to bank service fees
- Amount capped at $200
- Any other personal use of trust funds is commingling and a license law violation
Memory trick: Two hundred to cover bank fees — nothing more, please