Humber/Ontario Real Estate Course 3 Exam Practice

If a real estate broker incorrectly issues a cheque from the trust account resulting in a shortfall, what is the protocol?

1. Broker must fix the shortfall at the next reconciliation.

2. Immediately deposit an equivalent amount to cover the shortfall.

3. Broker must correct the shortfall within five business days.

4. Staff should not prepare cheques for signatures.

The correct answer is: Immediately deposit an equivalent amount to cover the shortfall.

If a real estate broker issues a cheque from the trust account that leads to a shortfall, the protocol requires the broker to immediately deposit an equivalent amount to cover that shortfall. This action is essential because trust accounts are meant to safeguard clients' funds, ensuring that the funds are available for their intended purposes. Promptly addressing any discrepancies helps maintain the integrity of the trust account and protects both the client's interests and the broker's legal and ethical responsibilities. When a shortfall occurs, it is critical to resolve the issue swiftly to prevent any legal ramifications or breach of fiduciary duty. By depositing an equivalent amount directly, the broker ensures that the trust account remains balanced and compliant with regulatory standards. This immediate action fosters transparency and accountability within the brokerage, which is crucial in maintaining trust with clients. Other options discuss different timelines or procedures that may not accurately address the urgency of the situation. Restoring the balance through immediate action is the most effective way to ensure compliance and protect client funds.