Humber/Ontario Real Estate Course 1 Exam Practice

Under the Real Estate and Business Brokers Act, what must be disclosed if trust funds are held in an interest-bearing account?

1. The rate of interest paid must be disclosed to the person for whom the deposit is held.

2. A minimum rate of interest of 2% must be provided.

3. The interest rates applicable to all parties involved must be disclosed.

4. Any remuneration paid to brokerages or salespersons from the commission account must be disclosed.

The correct answer is: The rate of interest paid must be disclosed to the person for whom the deposit is held.

The requirement under the Real Estate and Business Brokers Act mandates that if trust funds are held in an interest-bearing account, the rate of interest paid must be disclosed to the person for whom the deposit is held. This transparency is important for maintaining trust and ensuring that clients are aware of the financial benefits associated with their funds. By informing clients about the interest rate, brokers help ensure that clients understand the potential returns on their deposits, which is a crucial aspect of fiduciary duty. While other choices may touch on relevant disclosures, they do not directly address the specific requirement regarding the interest rate on trust funds. For example, a minimum interest rate or remuneration details, while important in their own contexts, are not mandated disclosures in this specific situation concerning interest-bearing accounts. This reinforces the significance of accurate and clear communication regarding interest earnings for clients' trust funds.