Humber/Ontario Real Estate Course 4 Exam Practice

If a real estate trust account shows a shortfall due to a cheque error, what must the broker of record do immediately after discovering the error?

1. Deposit an equivalent amount into the trust account immediately.

2. Reconcile the account during the next scheduled trust account reconciliation.

3. Ensure administrative staff no longer prepare cheques for signature.

4. Make up the shortfall within five business days.

5. Inform relevant stakeholders of the error and take remedial action.

6. Wait until the end of the financial quarter to address the shortfall.

The correct answer is: Deposit an equivalent amount into the trust account immediately.

The broker of record must take immediate action to address the shortfall in the trust account caused by a cheque error. It is essential to ensure that the trust account remains in good standing and compliant with regulations governing trust account management. By depositing an equivalent amount into the trust account immediately, the broker is directly rectifying the error, ensuring that the funds available for clients match what is reflected in the accounting records. This prompt response not only helps maintain the integrity of the trust account but also demonstrates professionalism and a commitment to ethical practices in real estate transactions. Ensuring that the trust account has the correct amount of funds available for clients is crucial, as mishandling these funds can lead to significant legal and financial repercussions. The other options do not fulfill the immediate requirement to rectify the shortfall. Waiting until the next scheduled reconciliation or delaying action until the end of the financial quarter would not address the issue in a timely manner. Additionally, simply informing stakeholders of the error without providing a solution would fall short of the necessary corrective action needed to maintain trust in the account.