Humber/Ontario Real Estate Course 3 Exam Practice

How should the Broker of Record disburse funds from the commission trust account after a transaction closes?

1. Co-operating brokerage, employed salespersons and brokers of the listing brokerage, and then the listing brokerage.

2. Co-operating brokerage, listing brokerage, and then employed salespersons and brokers of the listing brokerage.

3. Listing brokerage, co-operating brokerage, and then employed salespersons and brokers of the listing brokerage.

4. Listing brokerage, employed salespersons and brokers, and then co-operating brokerage not paid from the trust account.

5. Employed salespersons and brokers, then co-operating brokerage, and then listing brokerage.

6. Co-operating brokerage and listing brokerage simultaneously, then any other associated parties.

The correct answer is: Co-operating brokerage, employed salespersons and brokers of the listing brokerage, and then the listing brokerage.

The correct answer outlines the appropriate hierarchy for disbursing funds from the commission trust account, ensuring compliance with industry practices. When a transaction closes, the Broker of Record has a fiduciary duty to distribute funds in a manner that reflects the agreements made during the transaction. By prioritizing the co-operating brokerage, employed salespersons, and brokers of the listing brokerage, followed by the listing brokerage itself, this approach reflects the common practice in real estate transactions where commissions are often split between multiple parties involved in the listing and sale process. This sequential method ensures that all parties who contributed to the sale are compensated fairly and in accordance with pre-established agreements, maintaining trust and professional relationships in the industry. Additionally, this structure aligns with the principles of transparency and accountability in real estate transactions, reinforcing the Broker of Record's responsibility to manage client funds ethically. By handling disbursements in this order, the Broker of Record is also upholding the regulatory standards governing commission payments and trust accounts, which is essential for legal compliance.