Humber/Ontario Real Estate Course 3 Exam Practice

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When a deposit is received and deposited in a brokerage's real estate trust account and interest will be paid on that deposit, what must be disclosed?

  1. The interest rate to be earned must be disclosed, unless the deposit is made to a variable interest rate real estate trust account.

  2. No disclosure is required in the agreement of purchase and sale regarding what interest rate applies.

  3. The interest rate to be earned on the deposit must be disclosed to all parties to the agreement.

  4. All brokerages must maintain both an interest-bearing and a non-interest-bearing trust account.

  5. The interest earned must be remitted to the Real Estate Council.

  6. Only the buyer needs to be informed about the interest rate.

The correct answer is: The interest rate to be earned on the deposit must be disclosed to all parties to the agreement.

The correct answer highlights that transparency is crucial in real estate transactions, particularly when it comes to financial arrangements such as deposits. When a deposit is received and placed into a brokerage's real estate trust account that earns interest, it is essential to disclose the interest rate to all parties involved in the agreement. This ensures that everyone has a clear understanding of the financial terms associated with the deposit, fostering trust and clarity in the transaction process. This requirement is rooted in the principles of full disclosure and fairness in real estate dealings. By informing all parties about the interest rate, it frames expectations regarding any potential earnings from the deposit, which can be significant depending on the amount and duration the money is held in the trust account. This structured approach also helps mitigate any potential disputes that might arise over undisclosed information related to the financial aspects of the transaction. By ensuring all parties are equally informed about the interest rate, it upholds the ethical standards of practice within the real estate industry.

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