National Real Estate Exam (PSI)Practice of Real EstateHard
A broker receives an earnest money deposit on Monday but does not deposit it into the trust account until the following Friday, four business days later, with no written agreement authorizing delayed deposit. Assuming standard state requirements of depositing within a reasonable, specified timeframe, this delay would most likely be considered:
- ALegal since the funds were eventually deposited
- BA violation of trust account handling requirements
- CIrrelevant unless the buyer complains
- DAcceptable because brokers have unlimited time to deposit funds
Show answer & explanationAnswer & explanation
Correct answer: B. A violation of trust account handling requirements
Most states require brokers to deposit earnest money into a trust account within a specified short period (commonly 24-72 business hours), absent a written agreement stating otherwise. A four-day unauthorized delay would typically violate trust account handling rules, regardless of whether the funds were eventually deposited.
Why the other options are wrong
- A. Eventual deposit does not cure the violation of the required timeframe.
- C. Regulatory violations exist independent of whether a complaint is filed.
- D. Brokers do not have unlimited time; state law imposes strict deposit deadlines.
Timely Deposit Requirement
State regulations require brokers to deposit client trust funds into a trust account within a specified short period, typically a few business days, absent written authorization otherwise.
- Deadlines are usually measured in business days (often 1-3)
- Failure to deposit timely is a violation even without harm to the client
- Written agreements can sometimes extend timing with proper disclosure
Memory trick: The clock starts ticking the moment the check lands in your hand.