Humber/Ontario Real Estate Course 3 Exam Practice

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Prepare for the Humber/Ontario Real Estate Course 3 Exam. Study with challenging questions and detailed explanations to enhance your understanding. Get ready to excel in your exam!

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A trust account, established by a real estate brokerage to hold deposits, must be formally designated as a:

Real estate trust account.
Real estate deposit account.
Brokerage trust account.
Deposit trust account.

The correct answer is: Real estate trust account.

A trust account established by a real estate brokerage to hold deposits must be formally designated as a real estate trust account because this designation ensures compliance with regulatory requirements specific to the real estate industry. Trust accounts are essential for safeguarding client funds and ensuring that they are used solely for the purpose intended, which in this case is to hold deposits related to real estate transactions. The term "real estate trust account" specifically indicates that the account is designated for managing funds associated with real estate dealings, thus providing clarity and legality in financial transactions. Having such a clear designation is crucial for both the brokerage and the clients, as it provides a level of protection and ensures that the funds are handled in accordance with the law. Other terminology like "real estate deposit account" or "deposit trust account" does not convey the same level of specificity required by regulatory frameworks, which could lead to potential confusion or misinterpretation of the account's purpose. "Brokerage trust account" could apply to other types of businesses as well, not solely limited to real estate transactions, thereby lacking the specificity that is crucial in this context.