Client/escrow funds must be held in the broker's escrow/trust account, separate from the broker's own money.
Before you read
Test yourself first: 5 questions
Question 1 of 5
When a Massachusetts broker holds a buyer's deposit pending closing, those funds must be:
Answer: B. Massachusetts brokers must hold client deposits in a separate escrow/trust account and may not commingle those funds with the broker's own money. Commingling and conversion of trust funds are serious license-law violations.
Question 2 of 5
A Massachusetts broker receives an earnest money deposit from a buyer. How must the broker handle those funds?
Answer: B. Massachusetts brokers must place client deposits in a separate escrow or trust account and may not commingle them with the broker's own funds. Commingling and conversion of client funds are serious license-law violations.
Question 3 of 5
Which of the following is a prohibited handling of client trust funds by a Massachusetts broker?
Answer: C. Commingling client trust funds with the broker's own money is prohibited. Brokers must segregate client funds in an escrow/trust account, keep records, and account for and disburse the funds per the agreement.
Question 4 of 5
In Massachusetts, when a broker holds clients' or customers' funds such as earnest-money deposits, those funds must be kept in what type of account?
Answer: A. Massachusetts brokers must deposit money received on behalf of others (e.g., deposits) into a separate escrow/trust account that is distinct from the broker's own business and personal funds. Keeping such money in operating or personal accounts is prohibited.
Question 5 of 5
The practice of mixing a client's escrow deposit with the broker's personal or business funds in the same account is known as:
Answer: A. Commingling is the improper mixing of clients' trust funds with the broker's own money. Massachusetts requires escrow funds to be held separately to avoid commingling.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Salesperson pre-license hours: 40 classroom hours.
- Massachusetts is NOT a community-property state; it is a separate-property (common-law) state.
- Lead paint: federal disclosure plus Massachusetts lead law protections apply to housing built before 1978.
- Client/escrow funds must be held in the broker's escrow/trust account, separate from the broker's own money.
- Commingling client funds with the broker's personal or business operating funds is prohibited.
- Only a broker (not a salesperson) maintains the escrow/trust account and is accountable for its funds.
- Massachusetts is a 'buyer beware' (caveat emptor) state, but licensees may not misrepresent or conceal known material defects.
MA Disclosures, Escrow/Trust Funds & Key Numbers Cheat Sheet: FAQs
Is MA Disclosures, Escrow/Trust Funds & Key Numbers Cheat Sheet on the real estate exam?
Yes. State License Law is a scored domain on the Massachusetts real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does Massachusetts test this differently?
Massachusetts applies its own license law on top of the national portion. This page covers the Massachusetts rules specifically, which is what the state section of your exam tests.
