Brokerage Operations, Trust Accounts and Supervision
What the exam tests
Brokerage Operations, Trust Accounts and Supervision tests the broker’s responsibility for escrow funds, records, supervision, advertising, and office operations. Questions often ask who is accountable when a salesperson mishandles money.
Core rules
- The broker is responsible for supervising affiliated licensees and may be disciplined for their violations, even if the broker did not personally participate.
- Trust funds such as earnest money and security deposits must be deposited in a separate escrow account, not commingled with operating funds, and disbursed only as authorized.
- The broker must maintain transaction records, agency agreements, disclosures, and trust-account records for the required retention period.
- Advertising must identify the brokerage; branch offices and team names must comply with Commission rules.
- Independent contractor status affects taxes and benefits, not the broker’s supervisory duties or the salesperson’s licensing affiliation.
Worked example
A salesperson receives a $10,000 earnest money check and deposits it into the brokerage’s general operating account “to cover payroll until closing.” This is commingling and conversion of trust funds. The broker is responsible for supervision and must restore the funds, maintain escrow records, and expect Commission discipline.
Traps that cost marks
Do not treat the broker as responsible only for the broker’s own acts. Do not use operating funds for escrow. Do not assume independent contractor status eliminates supervision. Do not ignore recordkeeping for cash transactions.