Iowa Real Estate Practice Exam

What must be true if a broker transfers funds between accounts to cover necessary repairs?

1. The broker must inform the commission first

2. The individual ledgers must reflect the broker's actions

3. The broker must notify the owner after the repairs are made

4. It is illegal to transfer funds

The correct answer is: The individual ledgers must reflect the broker's actions

For a broker to transfer funds between accounts to cover necessary repairs, it is essential that the individual ledgers reflect the broker's actions. This requirement ensures transparency and accountability in the handling of funds. Maintaining accurate records in individual ledgers allows for a clear audit trail, demonstrating how funds have been allocated and providing evidence of proper management of client money. This practice helps protect all parties involved by ensuring compliance with regulations and fostering trust between the broker and the clients. The other options address different aspects of real estate practice but do not directly pertain to the primary requirement is maintaining accurate records. For instance, notifying the commission or the owner may be relevant in certain situations but is not a fundamental requirement for transferring funds for repairs. Additionally, the assertion that it is illegal to transfer funds is incorrect, as brokers regularly manage fund transfers within regulatory frameworks, provided they keep detailed records.