Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

In property management, where is the money usually held by the broker for the owner?

1. Operating account

2. Client account

3. Trust account

4. Personal account

The correct answer is: Trust account

In property management, funds belonging to property owners, such as rent collected or security deposits, are typically held in a trust account. A trust account is specifically designed to safeguard the money that belongs to clients or third parties and is not to be used for the broker's personal or operating expenses. The primary purpose of a trust account is to ensure that client funds are properly separated from the broker's operating funds. This separation is not only good practice but often a legal requirement in many states to protect the interests of property owners and tenants. It helps in maintaining transparency and accountability, as the funds in the trust account should only be released with proper authorization for specific purposes, such as paying property expenses or disbursing funds to the owner. By contrast, operating accounts are generally used for the broker's own business expenses, personal accounts are meant for the broker's personal finances, and client accounts may refer to accounts for specific clients but do not provide the same level of protection and oversight for trust funds as trust accounts do. Thus, the correct choice accurately reflects the standard practice and the fiduciary responsibility of a property management broker.