California Real Estate Broker ExaminationReal Estate PracticeMedium
A real estate broker operating in California manages several residential properties. The broker regularly collects rent payments, security deposits, and earnest money deposits. According to California real estate law, which of the following is the MAXIMUM amount of the broker's personal funds that can be kept in a client trust account to cover bank service charges without being considered commingling?
- A$100
- B$200
- C$500
- D$1,000
Show answer & explanationAnswer & explanation
Correct answer: B. $200
California Business and Professions Code Section 10145 and related DRE regulations specifically permit a real estate broker to keep up to $200 of their own funds in a client trust account. This amount is strictly for the purpose of covering bank service charges or maintaining a minimum balance, preventing client funds from being used for these operational costs.
Why the other options are wrong
- A. $100 is less than the permitted amount.
- C. $500 exceeds the legally permitted amount and would be considered commingling.
- D. $1,000 significantly exceeds the legally permitted amount and would be a clear case of commingling.
CA Trust Account Buffer
The specific maximum amount of a broker's personal funds allowed in a California client trust account to cover bank service charges, preventing commingling.
- Maximum of $200.
- Solely for bank service charges or minimum balance.
- Not for operational expenses.
- Prevents inadvertent use of client funds for fees.
Memory trick: Two hundred dollars, no more, for bank fees to keep trust pure.