Humber/Ontario Real Estate Course 3 Exam Practice

What is the purpose of a commission trust account?

1. Is used solely for receiving and disbursing remuneration.

2. Can be used to return any excess funds, over and above remuneration earned, back to the seller.

3. Is only used for disbursing earned remuneration to the brokerage holding the deposit.

4. Can be used to disburse remuneration directly to employed salespersons with a co-operating brokerage.

5. Holds all transaction-related deposits and expenses until settlement.

6. Serves to manage both commission and operational funds.

The correct answer is: Is used solely for receiving and disbursing remuneration.

The purpose of a commission trust account is to ensure that all funds related to real estate transactions are handled in a compliant and secure manner. It primarily serves as a holding account for transaction-related deposits, such as the earnest money deposited by buyers, until the completion of the sale. This ensures that all parties involved can trust that the funds are safeguarded and will be released at the appropriate time. While the option that emphasizes the account's use for receiving and disbursing remuneration highlights a specific function, it's important to recognize that the main purpose of a commission trust account encompasses more than just remuneration. It also includes holding and distributing funds related to the transaction itself, ensuring transparency and adherence to regulatory requirements throughout the process. Other options may mention specific functionalities like returning excess funds or disbursing remuneration directly to involved parties, but these do not cover the comprehensive purpose of the account. The primary role is to act as a secure repository for deposits and related expenses until the transaction is settled, prioritizing the protection and proper management of all funds involved in real estate transactions.