Humber/Ontario Real Estate Course 2 Exam Practice

How is a commission trust account defined within real estate transactions?

1. Is designed exclusively for returning excess trust account funds back to the seller.

2. Is exclusively for distributing remuneration solely to the brokerage and its representatives.

3. Operates independently from the real estate trust account.

4. Can be used to return a deposit to the buyer if the sale is cancelled.

5. Includes funds for resolving disputes between buyer and seller.

6. Is combined with the brokerage's general operating funds.

The correct answer is: Operates independently from the real estate trust account.

A commission trust account in real estate transactions operates independently from the real estate trust account. This separate account is designated specifically for holding commission payments until they are earned by the brokerage through the completion of a real estate transaction. This structure ensures that commission funds are not mingled with funds held in the real estate trust account for deposits or other purposes, maintaining the integrity of the funds and providing transparency in financial transactions within the brokerage. Options A, B, D, E, and F are incorrect because they do not accurately define a commission trust account within real estate transactions. A commission trust account is distinct from returning excess trust account funds, distributing remuneration solely to the brokerage, returning deposits to buyers in case of cancelled sales, resolving disputes between buyers and sellers, or being combined with the brokerage's general operating funds.