California Real Estate Practice Exam

A broker has received a $5,000 personal check as deposit on an offer. Since the sellers are not home, the broker deposits the buyer's check into his broker trust account. The buyer thereafter rescinds the offer and demands the return of the deposit. The broker should:

1. none of the above.

2. return the buyer's check.

3. return the buyer's deposit in the form of a check drawn against the broker's trust account.

4. return the deposit.

The correct answer is: none of the above.

The most appropriate action in this scenario would be to return the buyer's deposit in the form of a check drawn against the broker's trust account. When a broker receives a deposit from a buyer, it is placed in a trust account, which is designed to hold funds on behalf of clients until the transaction is completed or terminated. If the buyer rescinds the offer, they are entitled to the return of their deposit. It is important to issue the return as a check from the broker's trust account rather than returning the original personal check. This ensures that the transaction is properly documented and compliant with regulations surrounding trust account handling. The act of depositing the buyer’s check into a broker trust account signifies that the broker is managing the funds responsibly, and returning the deposit in this manner maintains a clear record for both parties. Returning the deposit correctly ensures the broker upholds their duties in managing trust funds while also protecting the buyer's rights in the transaction. This approach reflects proper handling of deposits in real estate transactions according to regulatory standards.