Wisconsin Real Estate Sales Practice Exam

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What should a broker do if they receive funds that cannot be deposited?

Keep the funds until instructed
Hold it in a separate account
Forward funds to payee or return to payor
Donate the funds to charity

The correct answer is: Forward funds to payee or return to payor

When a broker receives funds that cannot be deposited, the appropriate action is to forward the funds to the intended payee or return them to the payor. This ensures that the funds are managed ethically and legally, maintaining the trust of clients and complying with regulatory standards governing real estate transactions. Keeping the funds without taking action can lead to potential legal issues or accusations of misappropriation. Similarly, holding the funds in a separate account may not resolve the issue of why they cannot be deposited and could lead to complications in record-keeping and compliance. Donating the funds to charity is not appropriate unless there is a clear, agreed-upon reason by all parties involved, which is often not the case in real estate transactions. Therefore, forwarding the funds to the rightful payee or returning them to the original payor is the best practice to ensure transparency and accountability in managing financial transactions.