Humber/Ontario Real Estate Course 2 Exam Practice

Which statement correctly describes the purpose of a commission trust account?

1. It is only for receiving and disbursing remuneration.

2. It can return excess funds above earned remuneration to the seller.

3. It disburses earned remuneration only to the brokerage holding the deposit.

4. It disburses remuneration directly to salespersons with cooperative brokerages.

5. It is used to hold deposits until closing.

6. It is used to manage property-related expenses on behalf of the seller.

The correct answer is: It is only for receiving and disbursing remuneration.

The correct answer is A. A commission trust account is specifically designed to receive and disburse remuneration related to real estate transactions. Real estate transactions often involve significant sums of money, and using a trust account ensures that these funds are handled safely and ethically. Additionally, using the trust account helps maintain transparency and accountability throughout the transaction process. Options B, C, D, E, and F do not accurately describe the purpose of a commission trust account in real estate transactions. Option B suggests returning excess funds above earned remuneration to the seller, which is not the primary purpose of a commission trust account. Option C incorrectly states that a commission trust account only disburses earned remuneration to the brokerage holding the deposit. Option D is inaccurate as commission trust accounts do not disburse remuneration directly to salespersons with cooperative brokerages. Option E is incorrect as the purpose of a commission trust account is not to hold deposits until closing. Option F is also incorrect as a commission trust account is not used to manage property-related expenses on behalf of the seller.