61. A salesperson working with buyers secures an offer on a property. The offer calls for an initial deposit of $1,000 to be held in escrow. The salesperson instructs the buyer to issue a personal check in that amount payable to the salesperson. This action is
Answer: C
This action is prohibited, because checks for deposits to be held in escrow may only be payable to the broker's escrow account.
Accepting a personal check made payable to the salesperson for an escrow deposit is not allowed, as such checks must be directed to the broker’s escrow account to ensure proper handling and accountability.
A) prohibited, because the salesperson accepted a personal check.
This option correctly identifies that the action is prohibited, but it fails to specify the critical reason why: checks for escrow deposits must be made out to the broker's escrow account rather than to the salesperson personally.
B) permissible, because the salesperson is acting as agent for the broker.
This option is incorrect because, while the salesperson acts on behalf of the broker, this does not grant them the authority to accept personal checks for escrow deposits. Such funds must always be directed to the broker's designated account.
C) prohibited, because checks for deposits to be held in escrow may only be payable to the broker's escrow account.
This is the correct answer. Escrow regulations require that all deposits be made payable directly to the broker's escrow account to ensure proper management and compliance with legal standards. Accepting a personal check violates these regulations.
D) permissible if the salesperson immediately writes a check for the deposit amount payable to their broker's escrow account.
This option is incorrect because it suggests a workaround that does not align with the escrow regulations. Even if the salesperson intends to transfer the funds to the broker's account, the initial acceptance of a personal check is still not permissible.
Conclusion
The correct answer is C, as it emphasizes the necessity for escrow deposits to be handled in compliance with established protocols, specifically that they must be made payable to the broker's escrow account. Other options either misinterpret the regulations or do not accurately reflect the required procedures for handling escrow deposits.