IL Broker Practice Exam.
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1. Because no facts were provided in the <facts> block, none of the standard "Financing" topics can be grounded. Under the grounding rules given, what is the only defensible action for a question writer in this situation?
- A. Invent plausible loan-to-value ratios and interest figures so the question set looks complete.
- B. Decline to assert any exam facts, because every number, date, fee, or statute must be traceable to a provided fact and none exist here.
- C. Reconstruct questions from a memorized version of a real licensing exam.
- D. Copy figures from general real-estate knowledge in the writer's training data.
Show answer & explanation
Answer: B
The grounding rules state that a writer may ONLY assert facts present in <facts> and must never use outside knowledge for any number, date, fee, hour-requirement, statute, or regulation number. The <facts> block supplied here is empty, so no substantive financing fact can be grounded. The copyright red line separately forbids reconstructing real or leaked exam items. The only rule-compliant action is to assert nothing that cannot be traced to a provided fact — choice B. This item makes no substantive financing claim and rests solely on the instructions themselves.2. An item of personal property becomes so permanently attached to real estate that it is now legally treated as part of the real property. This converted item is referred to as:
- A. A fixture
- B. An emblement
- C. A chattel
- D. A trade appurtenance
Show answer & explanation
Answer: A
A fixture is an article that was once personal property but has become part of the real property through permanent attachment. A chattel is movable personal property, and emblements refer to annual crops. Courts often examine the method of attachment, adaptability, and intent to determine fixture status.3. An owner grants her neighbor the right to cross her driveway to reach a public road. The neighbor does not own or possess the land but has a right to use it for that limited purpose. This right is best described as:
- A. A fee simple interest
- B. An easement
- C. A freehold estate
- D. A homestead
Show answer & explanation
Answer: B
An easement is a non-possessory right to use another's land for a specific purpose, such as ingress and egress. It does not convey ownership or possession. A fee simple and freehold estate are ownership interests, and a homestead is a protected residence status.4. A life estate is granted to a person "for the duration of her life." What happens to the property interest when the life tenant dies?
- A. It escheats to the state automatically in all cases
- B. It passes according to the terms of the original grant, to either a remainderman or by reversion to the grantor
- C. The life tenant may will it to her own heirs
- D. It converts into a tenancy in common
Show answer & explanation
Answer: B
A life estate lasts only for the measuring life. Upon the life tenant's death, the interest passes as specified in the grant — to a named remainderman, or it reverts to the grantor (a reversion). A life tenant cannot devise the estate to her own heirs because her interest ends at death.5. A charge or claim against a property that may affect its title or limit its use — such as a lien, easement, or restrictive covenant — is generally categorized as:
- A. An estate in land
- B. An encumbrance
- C. A freehold
- D. An allodial right
Show answer & explanation
Answer: B
An encumbrance is any claim, charge, or liability attached to property that may affect its title or use, including liens, easements, and restrictive covenants. It is not itself an ownership estate. Encumbrances can be monetary (liens) or non-monetary (easements, covenants).6. Two unmarried business partners take title to an investment property as co-owners. Each holds an undivided fractional interest, they may own unequal shares, and each partner's interest passes to his own heirs upon death rather than to the other partner. Which form of co-ownership is described?
- A. Joint tenancy
- B. Tenancy by the entirety
- C. Tenancy in common
- D. Ownership in severalty
Show answer & explanation
Answer: C
Tenancy in common allows two or more owners to hold undivided interests that may be unequal, with no right of survivorship — each owner's share passes to that owner's heirs. Joint tenancy carries survivorship, tenancy by the entirety is limited to spouses, and severalty is sole ownership.7. A homeowner holds a bundle of legal interests in her property, including the right to occupy it, sell it, lease it, and exclude others. In property law, this concept is best described as which of the following?
- A. The bundle of rights
- B. An easement in gross
- C. A restrictive covenant
- D. A lien priority
Show answer & explanation
Answer: A
Ownership is commonly conceptualized as a "bundle of rights" — a collection of legal interests such as the rights of possession, control, exclusion, enjoyment, and disposition. An easement, covenant, and lien are limitations or claims, not the ownership concept itself.8. Two people take title to a parcel together. Their deed states that upon the death of one owner, that owner's interest automatically passes to the survivor rather than to the deceased's heirs. Which form of co-ownership does this describe?
- A. Tenancy in common
- B. Joint tenancy with right of survivorship
- C. Ownership in severalty
- D. A leasehold estate
Show answer & explanation
Answer: B
The defining feature of joint tenancy is the right of survivorship: a deceased joint tenant's interest passes automatically to the surviving joint tenant(s), bypassing probate. Tenants in common have no survivorship and their share passes to heirs. Severalty is sole ownership by one person.9. An owner conveys land to another person "for as long as the land is used as a public library." This grant creates an estate that could end automatically if the stated condition is violated. This is an example of which category of estate?
- A. A fee simple absolute
- B. A defeasible fee
- C. A life estate pur autre vie
- D. A tenancy at sufferance
Show answer & explanation
Answer: B
A defeasible fee is an ownership estate that may be terminated upon the occurrence or non-occurrence of a specified condition. A fee simple absolute has no such conditions. A life estate is measured by a life, and a tenancy at sufferance is a holdover leasehold situation.10. A single individual purchases a condominium unit and takes title in her name alone, with no other person holding an interest. This manner of holding title is known as:
- A. Tenancy by the entirety
- B. Ownership in severalty
- C. Community property
- D. Tenancy in common
Show answer & explanation
Answer: B
Ownership in severalty means title is held by one person or entity alone, "severed" from any other owner. Tenancy by the entirety and community property involve spouses, and tenancy in common involves two or more co-owners.11. Which of the following best distinguishes real property from personal property?
- A. Real property can be owned; personal property cannot
- B. Real property includes land and things permanently affixed to it, while personal property is movable and not affixed
- C. Real property is always more valuable than personal property
- D. Personal property is always exempt from taxation
Show answer & explanation
Answer: B
Real property consists of land and improvements or items permanently attached to it, together with the associated rights. Personal property (chattel) is movable and not permanently affixed. Value and tax status do not define the categories.12. A seller signs a deed and hands it to the buyer, who accepts it, but the deed does not name the buyer as a party. Under the required elements of a valid deed, what is the effect of this omission?
- A. The deed remains fully effective because delivery and acceptance occurred
- B. The deed fails to satisfy the requirement that a deed name the parties
- C. The deed is automatically converted into a quitclaim deed
- D. The omission is cured automatically once the deed is recorded
Show answer & explanation
Answer: B
A deed must be in writing, name the parties, contain a legal description, include a granting clause, and be signed by the grantor and delivered and accepted; failing to name the parties means a required element is missing, regardless of delivery and acceptance.13. A lender fails to disclose the annual percentage rate and total finance charge to a borrower refinancing their principal residence. Which law and implementing regulation require this disclosure?
- A. RESPA, implemented by Regulation X
- B. The Fair Housing Act, implemented by HUD guidelines
- C. The Truth in Lending Act, implemented by Regulation Z
- D. The Statute of Frauds, implemented by state licensing law
Show answer & explanation
Answer: C
TILA, implemented by Regulation Z, requires disclosure of the APR and total finance charge so borrowers can compare the true cost of credit.14. A buyer and seller entered into a purchase agreement for a home, but the buyer's loan application is later denied and the financing contingency was not satisfied. What is the effect of an unsatisfied contingency on the parties' obligations?
- A. The contract becomes void immediately regardless of the contingency terms
- B. The buyer's performance obligation does not arise, since contingencies must be satisfied before a party is obligated to perform
- C. The seller may sue for specific performance regardless of the contingency
- D. The buyer forfeits the earnest money automatically with no recourse
Show answer & explanation
Answer: B
Contingencies are conditions that must be satisfied before a party is obligated to perform, commonly financing, inspection, and appraisal contingencies; an unsatisfied financing contingency means the buyer is not yet obligated to perform.15. A seller signed a contract to sell a parcel of land but later refuses to convey title. The buyer wants the actual property, not money damages. What remedy is most appropriate, and why?
- A. Liquidated damages, because earnest money covers any breach
- B. Rescission, because land disputes are always voidable
- C. Specific performance, because land is deemed unique and compels conveyance
- D. Reformation, because the deed lacked a legal description
Show answer & explanation
Answer: C
Specific performance compels conveyance because land is deemed unique, making it the appropriate remedy when the buyer wants the actual property rather than damages.16. A seller entered into an oral agreement to sell a house, and later refuses to close, claiming the agreement cannot be enforced because it was never put in writing. How should this contract be classified?
- A. Void, because it lacked a required element
- B. Voidable, because either party may disaffirm it
- C. Unenforceable, because it is otherwise valid but the Statute of Frauds requires land-sale contracts to be in writing
- D. Fully enforceable, because oral agreements bind real estate sales
Show answer & explanation
Answer: C
The Statute of Frauds requires contracts for the sale of real estate to be in writing and signed by the party to be charged; an otherwise valid but unwritten land-sale agreement is unenforceable rather than void or voidable.17. A party makes an offer and the other party responds with different terms rather than accepting the original terms as stated. In general contract principles, how is this response best characterized?
- A. A binding acceptance regardless of the changed terms
- B. A counteroffer that rejects the original offer
- C. An automatic extension of the original offer's deadline
- D. A ratification of the original offer
Show answer & explanation
Answer: B
When a party responds to an offer by proposing different terms, that response operates as a counteroffer, which rejects and terminates the original offer rather than accepting it.18. During a review session, a student asks what 'consideration' means in the context of contract law. Which statement best describes consideration?
- A. The physical location where the contract is signed
- B. Something of value exchanged between the parties
- C. The emotional motive of one party
- D. A government fee paid to register the agreement
Show answer & explanation
Answer: B
Consideration refers to the bargained-for exchange of something of value between the parties, and it is what distinguishes an enforceable contract from a gratuitous promise.19. A licensing candidate is asked about the general purpose of a 'statute of frauds' concept in contract law. Which statement best captures its general purpose?
- A. To require that certain types of contracts be in writing to be enforceable
- B. To criminalize all oral agreements
- C. To eliminate the need for consideration
- D. To make every contract automatically renewable
Show answer & explanation
Answer: A
A statute of frauds generally requires that certain categories of contracts be evidenced by a writing to be enforceable, serving to prevent fraudulent claims about the existence of agreements.20. After a valid contract is formed, both parties fully perform every obligation they owe. In contract terms, the contract is then said to be:
- A. Breached
- B. Discharged by performance
- C. Rescinded for fraud
- D. Voided for lack of capacity
Show answer & explanation
Answer: B
When both parties completely fulfill their contractual obligations, the contract is discharged by performance, meaning the duties under it are satisfied and extinguished.21. A person who has not yet reached the age of legal majority signs an agreement. Under general contract principles, how is a contract entered into by a minor typically treated?
- A. Automatically void from the moment of signing in all cases
- B. Fully binding and non-cancelable like an adult's contract
- C. Generally voidable at the option of the minor
- D. Converted into a criminal matter
Show answer & explanation
Answer: C
A minor generally lacks full capacity to contract, so contracts entered into by a minor are typically voidable at the minor's option rather than automatically void or fully binding.22. An agreement is formed for a purpose that the law prohibits. What is the general effect of an illegal purpose on the enforceability of the contract?
- A. It makes the contract enforceable only against the buyer
- B. It renders the contract generally unenforceable
- C. It has no effect on enforceability
- D. It doubles the damages available to each party
Show answer & explanation
Answer: B
A contract formed for an illegal purpose is generally unenforceable, because courts will not lend their aid to enforce an agreement whose object violates the law.23. An examinee is asked which element must be present for a contract to be legally enforceable. The instructor emphasizes that this is one of the foundational requirements. Which of the following is a required element of a valid contract?
- A. Mutual assent between the parties
- B. A notarized signature on every page
- C. A witness present at signing
- D. Payment made in full before formation
Show answer & explanation
Answer: A
Mutual assent — a meeting of the minds evidenced by offer and acceptance — is a core element required to form a valid contract. Notarization, witnesses, and prepayment are not universally required elements of contract formation.24. Two parties dispute whether a valid contract exists because one claims there was never a true 'meeting of the minds.' What does the phrase 'meeting of the minds' most directly refer to?
- A. That both parties are physically present in the same room
- B. That the parties mutually understand and agree to the essential terms
- C. That the parties are related to one another
- D. That a judge has pre-approved the agreement
Show answer & explanation
Answer: B
'Meeting of the minds' refers to mutual understanding and agreement between the parties on the essential terms of the contract, reflecting genuine mutual assent.25. One party fails to perform its obligations under a valid contract without a legal excuse. This failure to perform is best described by which term?
- A. Novation
- B. Ratification
- C. Breach of contract
- D. Consideration
Show answer & explanation
Answer: C
An unexcused failure by a party to perform its contractual obligations constitutes a breach of contract. Novation and ratification refer to other contract concepts, and consideration is an element of formation.26. A contract is signed only because one party threatened the other with harm unless they signed. Which contract-law concept most directly describes this situation?
- A. Duress
- B. Consideration
- C. Assignment
- D. Performance
Show answer & explanation
Answer: A
Duress occurs when a party is forced to enter a contract through improper threats or coercion, which can undermine the genuine assent required and make the contract voidable.27. A listing agent learns that the seller would accept a price well below the listed price. After the listing expires, a former customer of the agent asks what the seller would have accepted. Which fiduciary duty prevents the agent from disclosing this?
- A. Obedience, because the seller never instructed disclosure
- B. Accounting, because the information relates to trust funds
- C. Confidentiality, because it survives termination and forbids revealing information that would harm the principal's bargaining position
- D. Reasonable care, because the agent must protect their own reputation
Show answer & explanation
Answer: C
Confidentiality survives termination of the agency and forbids revealing information that would harm the principal's bargaining position, so the agent cannot disclose the seller's bottom-line price even after the listing ends.28. A buyer working directly with the listing agent (without representation) discovers after closing that the agent knew of a hidden foundation crack but said nothing. What is the agent's liability exposure based on the duties owed to customers?
- A. None, because agents owe customers no duties at all
- B. None, because only fiduciary duties apply to customers
- C. Liability, because agents must disclose known material latent defects to customers even without owing them fiduciary duties
- D. Liability, but only because of the accounting duty
Show answer & explanation
Answer: C
Agents owe third parties, including customers, honesty and fair dealing and must disclose known material latent defects, even though they do not owe customers full fiduciary duties.29. A buyer submits a written offer to purchase a home. Before the seller communicates acceptance, the buyer's financial situation changes and the buyer wants out. Can the buyer withdraw the offer?
- A. No, once submitted in writing an offer is irrevocable
- B. Yes, an offer may be revoked any time before acceptance is communicated
- C. No, only the seller's agent can withdraw an offer
- D. Yes, but only if the seller has not yet reviewed it
Show answer & explanation
Answer: B
An offer may be revoked any time before acceptance is communicated, so the buyer may withdraw the offer up until that point.30. An owner holds title in fee simple absolute. Which statement correctly describes this estate?
- A. It terminates automatically upon the owner's death and cannot be inherited
- B. It is the highest and most complete form of ownership, freely inheritable and transferable
- C. It reverts to a remainderman when a named person dies
- D. It requires the grantor's consent before any resale
Show answer & explanation
Answer: B
The fee simple absolute is the highest and most complete form of ownership, freely inheritable and transferable, unlike a life estate which ends at death and passes to a remainderman or reverts to the grantor.31. A woman is granted the right to occupy and use a home for as long as she lives; upon her death the property is to pass to her nephew. What is the nephew's interest called?
- A. Reversion
- B. Remainderman
- C. Life tenant
- D. Grantor
Show answer & explanation
Answer: B
A life estate lasts for the duration of a named person's life, after which title passes to a remainderman (here, the nephew) or reverts to the grantor.32. A document purporting to be a deed omits a legal description of the property but is otherwise in writing, names the parties, includes a granting clause, and is signed by the grantor and delivered and accepted. Is this deed effective?
- A. Yes, because delivery and acceptance are the only requirements
- B. No, because a legal description is one of the required elements of an effective deed
- C. Yes, because a granting clause substitutes for a legal description
- D. No, because only a notary's signature can cure the omission
Show answer & explanation
Answer: B
A deed must be in writing, name the parties, contain a legal description, include a granting clause, and be signed by the grantor and delivered and accepted to be effective; omitting the legal description means a required element is missing.33. A buyer wants the strongest possible protection against title defects, including those that arose before the current seller ever owned the property. Which deed type should the buyer insist on?
- A. Quitclaim deed
- B. General warranty deed
- C. Deed of trust
- D. Bargain and sale deed
Show answer & explanation
Answer: B
A general warranty deed offers the greatest protection because the grantor warrants title against all defects arising at any time, including the covenants of seisin, quiet enjoyment, and warranty forever.34. After closing, a buyer promptly records the deed in the public land records. What is the primary legal effect of recording?
- A. It converts a quitclaim deed into a general warranty deed
- B. It gives constructive notice to the world and establishes priority
- C. It automatically extinguishes any existing property tax liens
- D. It creates an easement appurtenant benefiting the buyer's neighbor
Show answer & explanation
Answer: B
Recording the deed in the public land records gives constructive notice to the world and establishes priority among competing claims.35. A homeowner fails to pay property taxes, and the county later records a tax lien. A mortgage lender recorded its mortgage lien years earlier. In a foreclosure, how is priority between these two liens determined?
- A. The mortgage lien always has priority because it was recorded first
- B. The tax lien generally has priority regardless of when it was recorded
- C. Priority is decided by which lienholder forecloses first
- D. The two liens are paid in equal shares regardless of recording date
Show answer & explanation
Answer: B
Property tax liens and special assessments generally take priority over all other liens regardless of when they were recorded, so the tax lien would be paid ahead of the earlier-recorded mortgage.36. Two neighboring lots exist: Lot A has no direct road access, so its owner uses a paved path across Lot B to reach the street. This right was created in the deeds and passes automatically to future owners of Lot A. Which best describes Lot A's interest?
- A. An easement in gross held personally by the current owner
- B. An easement appurtenant, with Lot A as the dominant tenement
- C. A life estate in Lot B
- D. A general warranty running with Lot B only
Show answer & explanation
Answer: B
An easement appurtenant benefits an adjoining dominant tenement (Lot A) and burdens the servient tenement (Lot B), and it runs with the land, meaning it transfers automatically to successive owners.37. An owner grants a neighbor an easement appurtenant across a strip of land to access a lake. The owner later sells the burdened parcel to a new buyer. Does the easement continue to bind the new buyer's parcel?
- A. No, because easements terminate automatically upon any sale of the servient tenement
- B. Yes, because an easement appurtenant runs with the land and continues to burden the servient tenement
- C. No, because only the original grantor remains bound personally
- D. Yes, but only if the new buyer is also the dominant tenement owner
Show answer & explanation
Answer: B
An easement appurtenant benefits the dominant tenement and burdens the servient tenement, and it runs with the land, so it continues to bind successive owners of the servient parcel.38. In a mortgage transaction, which document is the borrower's personal promise to repay the debt?
- A. The mortgage
- B. The promissory note
- C. The deed of trust
- D. The title insurance policy
Show answer & explanation
Answer: B
A mortgage loan involves a promissory note that evidences the debt and the borrower's promise to pay, plus a mortgage or deed of trust that pledges the property as security for that promise.39. A borrower defaults on a loan in a state where the lender holds legal title to the property until the debt is fully paid. This state follows which theory of mortgage law?
- A. Lien theory
- B. Title theory
- C. Escrow theory
- D. Equity theory
Show answer & explanation
Answer: B
In a title-theory arrangement, the lender holds legal title until the debt is paid, whereas in a lien-theory state the borrower holds title and the lender holds only a lien.40. A borrower stops making payments, and the lender wants to demand immediate payment of the entire outstanding loan balance rather than waiting for each missed installment separately. Which clause in the loan documents allows this?
- A. The acceleration clause
- B. The alienation clause
- C. The defeasance clause
- D. The subordination clause
Show answer & explanation
Answer: A
The acceleration clause lets the lender declare the entire loan balance due immediately upon the borrower's default, rather than pursuing each missed payment individually.41. A borrower is quoted a loan of $250,000 with a charge of 2 discount points to reduce the interest rate. How much will the borrower pay in discount points at closing?
- A. $500
- B. $2,500
- C. $5,000
- D. $25,000
Show answer & explanation
Answer: C
One discount point equals one percent of the loan amount, so two points equal two percent of $250,000, which is $5,000 in prepaid interest to buy down the rate.42. A veteran who qualifies for VA financing wants to purchase a home with the smallest possible upfront cash outlay for a down payment. Which loan type is designed to allow this?
- A. Conventional loan
- B. FHA loan
- C. VA loan
- D. Jumbo loan
Show answer & explanation
Answer: C
VA loans are guaranteed for eligible veterans and can permit no down payment, unlike conventional loans, which are not government-backed.43. A buyer is obtaining a conventional loan and plans to put down 10 percent of the purchase price. Based on typical conventional loan requirements, what will the lender most likely require?
- A. An FHA insurance premium
- B. A VA funding fee
- C. Private mortgage insurance
- D. No additional insurance, since 10 percent is sufficient
Show answer & explanation
Answer: C
Private mortgage insurance is typically required on conventional loans when the down payment is less than twenty percent, and 10 percent falls below that threshold.44. A loan officer refers a borrower to a title company in exchange for an undisclosed cash payment with no service actually rendered for that payment. Which federal law is most directly violated by this arrangement?
- A. Truth in Lending Act
- B. Real Estate Settlement Procedures Act
- C. Fair Housing Act
- D. Civil Rights Act of 1866
Show answer & explanation
Answer: B
RESPA governs federally related mortgage loans and prohibits kickbacks and unearned referral fees, which is exactly what an undisclosed payment for no actual service represents.45. Which two disclosure documents does RESPA require to be provided to borrowers on federally related mortgage loans?
- A. The Loan Estimate and the Closing Disclosure
- B. The promissory note and the deed of trust
- C. The appraisal report and the title commitment
- D. The purchase agreement and the seller's disclosure
Show answer & explanation
Answer: A
RESPA requires the Loan Estimate and Closing Disclosure to be provided in connection with federally related mortgage loans.46. A homeowner refinances the mortgage on their principal residence with a new lender. Under the Truth in Lending Act, what right does the homeowner have regarding this transaction?
- A. A thirty-day right to shop for a better rate
- B. A three-day right of rescission
- C. An unlimited right to cancel before closing
- D. No cancellation rights once documents are signed
Show answer & explanation
Answer: B
TILA, implemented by Regulation Z, grants a three-day right of rescission on certain refinances of a principal residence.47. A seller receives a buyer's offer and responds by signing it but changing the closing date and lowering the requested repair credit. What is the legal effect of the seller's response?
- A. It is a valid acceptance, since the seller signed the document
- B. It is a counteroffer that rejects and extinguishes the buyer's original offer
- C. It is unenforceable because acceptance must be verbal
- D. It has no legal effect until recorded
Show answer & explanation
Answer: B
Acceptance must be unqualified, so any material change to the terms operates as a counteroffer that rejects and extinguishes the original offer.48. A grantor conveys a parcel to a buyer using a deed that carries no warranties and transfers only whatever interest the grantor happened to hold. Which type of deed was used?
- A. General warranty deed
- B. Quitclaim deed
- C. Special warranty deed
- D. Grant deed
Show answer & explanation
Answer: B
A quitclaim deed carries no warranties and conveys only whatever interest the grantor may have, making it distinct from warranty deeds that guarantee title.49. A real estate broker manages a rental property under a property management agreement. Under agency law, what type of agent is the property manager, and what duties does this create toward the owner?
- A. A special agent, owing only the duty of confidentiality
- B. A general agent, owing fiduciary duties including obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care
- C. A customer, owing only honesty and fair dealing
- D. A sub-agent, owing duties solely to the tenant
Show answer & explanation
Answer: B
A property manager is a general agent because the role involves a range of matters rather than a single transaction, and general agents owe the full set of fiduciary duties summarized by OLD CAR.50. A buyer's agent and seller's agent are actually the same licensee representing both parties in one transaction. Under what condition is this arrangement permitted?
- A. It is never permitted under any circumstances
- B. Only with the informed written consent of both parties
- C. Only if the buyer waives all fiduciary duties orally
- D. Only if the broker charges no commission
Show answer & explanation
Answer: B
Dual agency, representing both buyer and seller in the same transaction, is permitted only with the informed written consent of both parties.51. A broker deposits earnest money from a purchase contract directly into the brokerage's general operating account alongside commission income. Which fiduciary duty has been violated?
- A. Loyalty, because the broker favored their own interests
- B. Accounting, because client funds must be kept in a separate trust or escrow account and never commingled
- C. Obedience, because the seller did not authorize a deposit
- D. Disclosure, because the buyer was not told where funds were held
Show answer & explanation
Answer: B
Accounting requires depositing client funds in a separate trust or escrow account and never commingling them with the broker's own funds; depositing earnest money into the general operating account violates this duty.