New Jersey — Trust Accounts & Business Practices — New Jersey Real Estate — State Law Practice Test

This New Jersey Real Estate — State Law New Jersey — Trust Accounts & Business Practices practice set has 18 practice questions based on the official exam materials, each with an instant explanation.

Sample questions

Three questions from the New Jersey — Trust Accounts & Business Practices bank with the correct answer and an explanation. The practice quiz above draws 18 questions at random from the same bank.

1. In New Jersey, what must a broker do with a deposit (earnest money) received in a real estate transaction?

   • Deposit it promptly into a special broker trust (escrow) account maintained in a New Jersey bank — Correct answer
   • Place it in the broker's general operating account until closing
   • Give it directly to the seller as soon as the offer is signed
   • Keep it as cash in the office safe until both parties agree on disbursement

   Explanation: Under N.J.A.C. 11:5-5.1, a broker must maintain a special non-interest-bearing trust (escrow) account in a New Jersey bank and promptly deposit all monies received on behalf of others into it. The broker holds the funds as a custodian/fiduciary; the money is never the broker's own. Trust account（信托/托管账户）: a separate bank account where a broker holds others' money apart from the broker's own funds. NJ source: N.J.A.C. 11:5-5.1.

   Handbook: New Jersey Trust Accounts — broker must place deposits in a trust account (N.J.A.C. 11:5-5.1)

2. A New Jersey broker uses a buyer's escrow deposit to pay the brokerage's office rent, intending to repay it before closing. Under NJ rules, this is:

   • Unlawful conversion of escrow funds and grounds for license discipline — Correct answer
   • Permitted, because the broker intends to repay the money before closing
   • Allowed if the brokerage keeps written records of the loan to itself
   • A minor bookkeeping error that the Commission does not regulate

   Explanation: Using trust-account money for the broker's own purposes is conversion — an unlawful use of another's funds — even if the broker intends to repay it. N.J.A.C. 11:5-5.1 and the License Act forbid it, and §45:15-17 makes it grounds for license suspension or revocation. Conversion（挪用/侵占）: applying entrusted funds to one's own use. NJ source: N.J.A.C. 11:5-5.1; N.J.S.A. §45:15-17.

   Handbook: New Jersey Trust Accounts — no conversion of escrow funds (N.J.A.C. 11:5-5.1)

3. What does it mean for a New Jersey broker to 'commingle' funds, and is it permitted?

   • Mixing others' trust funds with the broker's own funds — it is prohibited — Correct answer
   • Combining two clients' deposits into one account — it is required
   • Splitting one deposit across several banks — it is encouraged
   • Earning interest on a deposit for the broker — it is allowed

   Explanation: Commingling means mixing clients'/others' trust money with the broker's own personal or business funds in the same account. NJ rules require trust money to be kept separate in the trust account; commingling is prohibited under N.J.A.C. 11:5-5.1 even if no money is lost. Commingling（混同）: improperly mixing trust funds with the broker's own funds. NJ source: N.J.A.C. 11:5-5.1.

   Handbook: New Jersey Trust Accounts — commingling prohibited (N.J.A.C. 11:5-5.1)