Iowa Real Estate Practice Exam

Which of the following actions are legal and will NOT result in the broker having their license suspended or revoked?

1. Depositing cash from a buyer-client into the selling broker's trust account

2. Converting earnest money to a personal account for processing

3. Providing financial advice to clients without a license

4. Failing to disclose all relevant property details to a buyer

The correct answer is: Depositing cash from a buyer-client into the selling broker's trust account

Depositing cash from a buyer-client into the selling broker's trust account is a legal action that complies with industry regulations concerning handling client funds. Trust accounts are specifically designed to hold funds on behalf of clients, ensuring that these funds are managed separately from the broker's personal or business funds. This practice reflects the broker's responsibility to protect client trust and demonstrate ethical behavior in real estate transactions. In contrast, converting earnest money to a personal account for processing violates rules regarding trust accounts and may result in disciplinary actions, such as suspension or revocation of the broker's license. Providing financial advice without proper licensing also poses legal risks, as brokers are not authorized to dispense financial advice unless they have the necessary qualifications. Failing to disclose all relevant property details breaches fiduciary responsibilities, potentially leading to legal action or loss of license. Therefore, only the action of properly depositing funds into a trust account is legal and not subject to penalties.