79. 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 lease 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.
In this scenario, the salesperson's instruction to have the buyer write a personal check payable to himself is inappropriate. It is essential that any deposits meant for escrow are payable directly to the broker's escrow account to ensure proper handling and compliance with legal and ethical standards.
A) prohibited, because the salesperson accepted a personal check.
This option is partially correct as it highlights the prohibition involved in the transaction. However, it misstates the reasoning by suggesting that the issue is the acceptance of a personal check rather than the fact that the check is not made payable to the broker's escrow account.
B) permissible, because the salesperson is acting as agent for the broker.
This option is incorrect. Although the salesperson is indeed acting as an agent for the broker, this does not grant the authority to accept checks made out to themselves. All escrow deposits must be directed to the broker’s account to maintain proper protocol.
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. It emphasizes the requirement that escrow deposits must be made out to the broker's escrow account, which is crucial for protecting the interests of both the buyer and the seller, as well as ensuring compliance with real estate regulations.
D) permissible if the salesperson immediately writes a check for the deposit amount payable to their broker's escrow account.
While this option suggests a potential workaround, it still fails to address the initial improper action of accepting a personal check. The primary issue remains that the original check should not be made out to the salesperson at all, as it undermines the integrity of the escrow process.
Conclusion
The correct answer, C, clearly identifies the critical requirement that escrow deposits must be made payable to the broker's escrow account. This ensures that funds are handled correctly and protects all parties involved in the transaction. The other options fail to adequately address the fundamental issue of proper escrow procedures, thus confirming that C is the only appropriate choice.