National Real Estate Exam (PSI)Practice of Real EstateMedium
A broker keeps a small amount of personal funds in the trust account solely to cover bank service charges and avoid the account dropping below the minimum balance required by the bank. This practice is generally:
- AProhibited because trust accounts may never contain broker funds
- BIllegal commingling in all circumstances
- COnly allowed if disclosed to every client individually
- DPermitted, as most states allow a limited personal reserve to cover bank fees
Show answer & explanationAnswer & explanation
Correct answer: D. Permitted, as most states allow a limited personal reserve to cover bank fees
Most state regulations permit brokers to maintain a small, specified amount of personal funds in the trust account strictly to cover bank service charges, preventing the account from being depleted by fees rather than mixing client funds for other purposes.
Why the other options are wrong
- A. An absolute prohibition ignores the recognized minimal-balance exception in most jurisdictions.
- B. A limited exception exists for covering bank charges, so it is not automatically illegal.
- C. Individual client disclosure is not the standard requirement for this limited exception.
Trust Account Minimum Balance Exception
Most states allow brokers to keep a small, specified personal amount in a trust account solely to cover bank service charges.
- Amount is typically capped and defined by state regulation
- Purpose is limited strictly to covering bank fees
- Using this reserve for other purposes becomes commingling
Memory trick: A pinch of personal cash keeps the account from starving on fees.