Humber/Ontario Real Estate Course 3 Exam Practice

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Which statement about a brokerage’s commission trust and real estate trust accounts is correct?

  1. Disbursements from the commission trust account should follow a specific order beginning with the listing brokerage.

  2. The brokerage must establish both types of accounts to comply with REBBA.

  3. The real estate trust account must be established as per REBBA, but a commission trust account is not mandated under the Act and Regulations.

  4. Excess funds in the real estate trust account must be moved to the commission trust before disbursement.

  5. The brokerage must disburse funds directly from the real estate trust account to the agents.

  6. Both accounts must be audited separately as per REBBA regulations.

The correct answer is: The real estate trust account must be established as per REBBA, but a commission trust account is not mandated under the Act and Regulations.

The statement about the brokerage's commission trust and real estate trust accounts being correct highlights the understanding of regulatory requirements under the Real Estate and Business Brokers Act (REBBA). According to REBBA, brokerages are mandated to establish a real estate trust account to handle funds that must be held in trust for clients, such as deposits and rents. However, the requirement for a commission trust account is not explicitly mandated by the Act and Regulations, meaning brokerages are not obligated to create one. This distinction is crucial in understanding the specific obligations brokerages have regarding the management of trust funds and how they relate to client transactions. The flexibility regarding the commission trust account allows brokerages to manage commissions and related disbursements in a manner that suits their operational model, provided they adhere to the core requirements set out in REBBA for the trust accounts that handle client money. Recognizing this regulatory framework helps clarify why establishing a real estate trust account is necessary, while the decision to have a commission trust account is discretionary, which is accurately captured in the statement.

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