UNIT 13- ESCROW EXAM QUESTIONS
AND ANSWERS
Once a contract is signed and an earnest money deposit is received how long before it
must be deposited in an escrow account?
Within 3 days
Within 5 days
Immediately
The next business day - Correct Answers -within 5 days
All of the following are reason a broker may disburse funds from an escrow account
except
Court order
Collect the commission
Transaction is consummate
Mutual agreement - Correct Answers -Collect the commission
If the board finds that an escrow account is being mismanaged what action might they
take?
Seize control of the account
Bar licensee access
Appoint a receiver to manage the account
All of the above - Correct Answers -All of the above
Broker foster manages an apartment building for owner smith. Foster used the security
deposits of two tenants for general maintenance on the apartment building. What this
action permissible?
No using these deposits for repairs would eliminate the need to charge damage repair
when tenants move out
Yes as long as the owner is aware of it
No security deposits are held for tenants in an escrow account and are not part of the
operating funds
Yes because deposits are held to cover the cost of repairs - Correct Answers -No
security deposits are held for tenants in an escrow account and are not part of the
operating funds
The tenant's security deposits may be used to repair any damages (except fair "wear
and tear") to the tenant's apartments. The Virginia License Law and Board Regulations
require that such funds to be placed in an escrow account, they cannot be kept in a
general operating account.
Which payment does not need to be held in an escrow account?
, An earnest money deposit if closing is scheduled in less than 15 days
An earnest money deposit if the amount is less than $250
A referral fee received from an out of state broker
Money received as a security deposit for rental property - Correct Answers -A referral
fee received from an out of state broker
Rental security deposits must be held in an escrow account. Any earnest money deposit
must also be placed in the escrow account (no matter how short a period it will be held).
Meanwhile, a referral fee is earned commission that belongs to the broker, so it should
be placed in his personal or operational account.
The Board believes that a broker is not properly managing her escrow account. Upon
request, the court appoints a receiver to manage the account. After investigation, the
Board finds that the broker is innocent of any wrong doing. Who is responsible for the
expenses and fees of the court-appointed receiver?
The broker as a necessary expense to establish her innocence
The court that appointed that receiver
The board using money from its operating budget
The board using money from the transaction recovery fund - Correct Answers -The
board using money from its operating budget
The Board must bear the expense if the licensee is innocent. The Board pays such
costs from its operating funds, not the Transaction Recovery Fund.
Which of the following actions is not a violation of virginia license law
Accepting a net listing
Placing an earnest money deposit in an interest bearing account but failing to advise all
parties of that fact
Showing a home to a prospective buyer before the owner has signed a listing
agreement
Refusing to cooperate on the sale of property listed exclusively - Correct Answers -
Refusing to cooperate on the sale of property listed exclusively
The law does not specify that you must cooperate on listings; this is only customary. All
other answers are violations of the law.
Escrow may be used in which of the following situations?
When property is purchased and secured by a deed of trust
In an exchange of property
With a contract for sale
All of the above - Correct Answers -All of the above
Escrow accounts are necessary if holding money or property for others. If established, it
must be in the firm's licensed name, with a federally insured bank, and all accounts and
all deposits must be designated (labeled) as "escrow."
Broker tom can remove money from his escrow account in all of the following
circumstances except
Termination of the contract by performance
Rescission of the contract by the seller
AND ANSWERS
Once a contract is signed and an earnest money deposit is received how long before it
must be deposited in an escrow account?
Within 3 days
Within 5 days
Immediately
The next business day - Correct Answers -within 5 days
All of the following are reason a broker may disburse funds from an escrow account
except
Court order
Collect the commission
Transaction is consummate
Mutual agreement - Correct Answers -Collect the commission
If the board finds that an escrow account is being mismanaged what action might they
take?
Seize control of the account
Bar licensee access
Appoint a receiver to manage the account
All of the above - Correct Answers -All of the above
Broker foster manages an apartment building for owner smith. Foster used the security
deposits of two tenants for general maintenance on the apartment building. What this
action permissible?
No using these deposits for repairs would eliminate the need to charge damage repair
when tenants move out
Yes as long as the owner is aware of it
No security deposits are held for tenants in an escrow account and are not part of the
operating funds
Yes because deposits are held to cover the cost of repairs - Correct Answers -No
security deposits are held for tenants in an escrow account and are not part of the
operating funds
The tenant's security deposits may be used to repair any damages (except fair "wear
and tear") to the tenant's apartments. The Virginia License Law and Board Regulations
require that such funds to be placed in an escrow account, they cannot be kept in a
general operating account.
Which payment does not need to be held in an escrow account?
, An earnest money deposit if closing is scheduled in less than 15 days
An earnest money deposit if the amount is less than $250
A referral fee received from an out of state broker
Money received as a security deposit for rental property - Correct Answers -A referral
fee received from an out of state broker
Rental security deposits must be held in an escrow account. Any earnest money deposit
must also be placed in the escrow account (no matter how short a period it will be held).
Meanwhile, a referral fee is earned commission that belongs to the broker, so it should
be placed in his personal or operational account.
The Board believes that a broker is not properly managing her escrow account. Upon
request, the court appoints a receiver to manage the account. After investigation, the
Board finds that the broker is innocent of any wrong doing. Who is responsible for the
expenses and fees of the court-appointed receiver?
The broker as a necessary expense to establish her innocence
The court that appointed that receiver
The board using money from its operating budget
The board using money from the transaction recovery fund - Correct Answers -The
board using money from its operating budget
The Board must bear the expense if the licensee is innocent. The Board pays such
costs from its operating funds, not the Transaction Recovery Fund.
Which of the following actions is not a violation of virginia license law
Accepting a net listing
Placing an earnest money deposit in an interest bearing account but failing to advise all
parties of that fact
Showing a home to a prospective buyer before the owner has signed a listing
agreement
Refusing to cooperate on the sale of property listed exclusively - Correct Answers -
Refusing to cooperate on the sale of property listed exclusively
The law does not specify that you must cooperate on listings; this is only customary. All
other answers are violations of the law.
Escrow may be used in which of the following situations?
When property is purchased and secured by a deed of trust
In an exchange of property
With a contract for sale
All of the above - Correct Answers -All of the above
Escrow accounts are necessary if holding money or property for others. If established, it
must be in the firm's licensed name, with a federally insured bank, and all accounts and
all deposits must be designated (labeled) as "escrow."
Broker tom can remove money from his escrow account in all of the following
circumstances except
Termination of the contract by performance
Rescission of the contract by the seller
