Agency and License Law Practice Question
Question
A client asks whether a fact should be disclosed for the Indiana Real Estate Broker Exam involving conversion and broker affiliation and supervision. Which statement is the best answer? (Item 31)
Answer choices
- A. Client funds may be mixed with business funds if the broker reconciles the account later.
- B. The issue can be ignored if the parties want to close quickly.
- C. Recognize unauthorized use of client money as serious misconduct in a way that fits Indiana exam practice.
- D. The rule applies only to commercial transactions and never to residential transactions.
Correct Answer
C. Recognize unauthorized use of client money as serious misconduct in a way that fits Indiana exam practice.
Explanation
The correct answer is C because conversion requires candidates to recognize unauthorized use of client money as serious misconduct. The Indiana reference keeps the scenario tied to state licensing practice, while the other options rely on unsafe assumptions about oral custom, escrow, client preference, independent licensee authority, or ignoring written duties.
Question details
- Difficulty: medium
- Domain: Agency and License Law
- Objective: conversion