Humber/Ontario Real Estate Course 2 Exam Practice

What must be disclosed when interest is earned on a deposit in a brokerage's trust account?

1. Brokerages must maintain both interest-bearing and non-interest bearing trust accounts.

2. The interest rate to be earned must be disclosed to all parties involved.

3. No disclosure of the interest rate is necessary in the purchase agreement.

4. Disclosure is not required unless the account has a variable interest rate.

The correct answer is: The interest rate to be earned must be disclosed to all parties involved.

When interest is earned on a deposit in a brokerage's trust account, the interest rate to be earned must be disclosed to all parties involved. This disclosure is important to ensure transparency in the transaction. It allows both the clients and the brokerage to be aware of the terms regarding the interest earned on the deposit, promoting trust and clarity in the transaction. Option A is incorrect because while brokerages must maintain separate trust accounts, the necessity for disclosing the interest rate is not covered by this statement. Option C is incorrect because disclosure of the interest rate is indeed necessary and cannot be omitted from the purchase agreement. Option D is incorrect because disclosure of the interest rate is required regardless of whether the account has a fixed or variable interest rate. Therefore, the correct answer is B - The interest rate to be earned must be disclosed to all parties involved.