Contracts, Finance, and Transfer Practice Question
Question
A broker is correcting a new licensee’s misunderstanding for the Michigan Real Estate Salesperson Exam involving prorations and agency and trust-money compliance. Which response best applies the rule? (Item 162)
Answer choices
- A. The rule applies only to commercial transactions and never to residential transactions.
- B. Allocate recurring expenses such as taxes, rent, interest, or assessments in a way that fits Michigan exam practice.
- C. Client funds may be mixed with business funds if the broker reconciles the account later.
- D. The issue can be ignored if the parties want to close quickly.
Correct Answer
B. Allocate recurring expenses such as taxes, rent, interest, or assessments in a way that fits Michigan exam practice.
Explanation
The correct answer is B because prorations requires candidates to allocate recurring expenses such as taxes, rent, interest, or assessments. The Michigan 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: Contracts, Finance, and Transfer
- Objective: prorations