Wisconsin Real Estate Sales Practice Exam

If a property is listed, where must earnest money deposits go into?

1. The owner's personal account

2. The state treasury

3. A broker's trust account

4. An interest-yielding bank account

The correct answer is: A broker's trust account

The correct answer highlights an important aspect of handling earnest money deposits in real estate transactions. When a property is listed, earnest money must be placed into a broker's trust account. This type of account is specifically designated for holding funds belonging to clients and is regulated to ensure that these funds are handled appropriately. Trust accounts provide a safeguard for both the buyer and the seller, as funds are kept separate from the broker's personal or business accounts, ensuring that they are not used for any other purpose. This is crucial for maintaining ethical standards and protecting the interests of all parties involved in a real estate transaction. In contrast, placing earnest money in an owner's personal account would mix personal finances with transactional funds, which is not permissible. Sending funds to the state treasury does not apply to earnest money, as it is not a tax or fee owed to the state. While an interest-yielding bank account can be a component of the trust account, the key point here is that earnest money must specifically go into a broker's trust account to maintain proper fund management and compliance with real estate regulations.