Humber/Ontario Real Estate Course 3 Exam Practice

Which action violates REBBA deposit regulations?

1. Failing to disclose that deposit funds are held in an interest-bearing account.

2. Maintaining the deposit in a non-interest-bearing account.

3. Using the deposit for personal expenses before closing.

4. Returning the deposit directly to the buyer upon deal cancellation.

5. Depositing client funds in a variable interest account without disclosure.

6. Investing the deposit in a high-risk portfolio.

The correct answer is: Failing to disclose that deposit funds are held in an interest-bearing account.

The action that violates REBBA deposit regulations is the failure to disclose that deposit funds are held in an interest-bearing account. Under the Real Estate and Business Brokers Act (REBBA), it is a requirement for real estate professionals to inform clients about the handling of their deposit funds, including whether or not those funds are being placed in interest-bearing accounts. This disclosure is essential because it impacts the clients' financial interests. By not providing such information, the brokerage or agent could be seen as not acting in the best interests of their clients and failing to maintain transparency, which is a key principle in real estate transactions. In contrast, other actions listed, while possibly questionable in terms of best practices or ethics, do not directly breach the specific regulations set forth by REBBA regarding the handling and disclosure of deposit funds. For example, maintaining the deposit in a non-interest-bearing account is not a violation as long as it is disclosed, and returning the deposit directly to the buyer upon cancellation can be permissible under certain conditions. However, it's critical to adhere to the rules about disclosure to ensure compliance with the regulations and protect both the clients and the real estate professional.