Humber/Ontario Real Estate Course 3 Exam Practice

For purposes of disbursement from a commission trust account, which statement is correct?

1. Amounts are first disbursed to the broker of record.

2. Both cooperating brokerage and salespersons are priorities for payout.

3. Disbursements are held until all transactions finalize.

4. The commission is transferred to the brokerage's general fund first.

5. Payment is made directly to the seller as the primary recipient.

6. Salespersons receive their commission after cooperating brokerages.

The correct answer is: Both cooperating brokerage and salespersons are priorities for payout.

The correct choice highlights that both cooperating brokerages and salespersons have priority for payout from a commission trust account. This reflects the nature of commission distribution in real estate transactions, where cooperating brokerages (the agents representing the seller and the buyer) contribute to the overall success of the transaction and thus are entitled to receive their commissions promptly. In addition, salespersons who have earned their commission through their efforts in facilitating the sale also have priority in receiving their payments. This ensures that those who have contributed to the sale and have worked to finalize the deal are compensated in accordance with their agreements and the industry standards governing commission distribution. Other statements misrepresent the order and recipients of disbursement from a trust account. For example, disbursements are not typically held until all transactions finalize, as that could delay payment to those who have already completed their obligations. Also, the idea that payment goes directly to the seller or to the brokerage’s general fund first misrepresents the process that prioritizes payment to the cooperating parties in a transaction before any brokerage holds or retains funds. Thus, recognizing the equal priority of both cooperating brokerages and salespersons aligns with the standard practices in the real estate industry regarding commission payments.