CHP 40 - Trust Accounts Flashcards
Is earnest money deposit required for a valid contract?
No but it’s strongly recommended
When does a transaction exist
Once real estate conract is signed or a lease agreed to by parties
What does not fall under “escrow monies”
Rent paid to agent for owner
How much total interest can an escrow account bare
NONE unless both parties specifically request it in writing
ALL escrow accounts must be maintained at a _________
Federally insured depository
Who is permitted to withdraw funds from escrow
Sponsoring broker or authorized agent
The buyers mom writes a check for earnest money. FUnds must be dispursed. Who will the check be dispursed to…
A party to the contract
When must earnest money be deposited
No later than Next business day after contract acceptance
When transaction has terminated how much sponsoring broker release forms
No earlier than the day before and no later than the next business day after
Required escrow records
- Master escrow 2. account log
- journal
- ledger
monthly reconcilation statements
How long must reconcilation records be kept on average
3-5 years
3 most common problems associated w/ trust fund accounts
1) Insufficient basic accounting/math skills
2) Lack of knowledge of laws
3) Poor supervision of operations by broker
How much does FDIC insure
$250K
What to do if escrow records are lost or destroyed
Report to state licensing agency and then reconstruct records with statements and reciepts
Who holds the escrow money when a dipsute occurs
The sponsoring broker
