Client and earnest money funds must be handled as trust funds, kept separate from personal funds.
Before you read
Test yourself first: 5 questions
Question 1 of 5
Two salespersons licensed under the SAME Nevada broker each separately represent the buyer and the seller in one transaction. Under Nevada's designated/assigned agency rules, this arrangement is best described as:
Answer: B. Nevada allows a broker to assign different affiliated licensees to represent the buyer and the seller separately in the same transaction. This 'assigned' or designated arrangement lets each client receive individual representation while the broker supervises and manages the inherent conflict, with required disclosures.
Question 2 of 5
Nevada licensees frequently use Division-recognized standardized residential purchase agreement forms. Why is using these standardized forms important for a non-attorney salesperson?
Answer: B. A salesperson is not an attorney; drafting original contract language can constitute the unauthorized practice of law (UPL). Filling in approved, standardized forms keeps the licensee within the proper scope of real estate practice. The forms do not replace required disclosures and are the customary, safe vehicle for documenting the transaction.
Question 3 of 5
How must a Nevada licensee handle client or third-party funds, such as an earnest money deposit, received in a transaction?
Answer: B. Trust funds must be deposited into the broker's trust account and may not be commingled with the broker's personal or business operating funds.
Question 4 of 5
A Nevada licensee who commingles a client's trust funds with the broker's own operating funds has most directly violated rules concerning:
Answer: B. Commingling client trust funds with the broker's own money is a violation of Nevada's trust account handling requirements and may subject the licensee to discipline.
Question 5 of 5
A Nevada salesperson deposits a buyer's earnest money into the salesperson's personal checking account 'just temporarily' to cover the broker's vacation. This is BEST described as which prohibited act?
Answer: A. Client funds such as earnest money must be handled through the broker's trust/escrow account, not a licensee's personal account. Mixing client money with personal funds is commingling, and using it is conversion. Both are grounds for discipline regardless of intent to return it.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Seller's Real Property Disclosure is required for residential resale under NRS Chapter 113.
- The seller discloses known defects and conditions of the property to the buyer.
- Nevada is a community property state: property acquired during marriage is generally jointly owned.
- Client and earnest money funds must be handled as trust funds, kept separate from personal funds.
- Commingling client trust funds with the broker's own money is prohibited.
- The 'Duties Owed' disclosure should accompany the agency relationship.
- Material facts known to the licensee about the property must be disclosed.
- Renewal requires completing approved continuing education before the license expires.
Nevada Disclosures, Trust Funds & Key Concepts Cheat Sheet: FAQs
Is Nevada Disclosures, Trust Funds & Key Concepts Cheat Sheet on the real estate exam?
Yes. State License Law is a scored domain on the Nevada 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 Nevada test this differently?
Nevada applies its own license law on top of the national portion. This page covers the Nevada rules specifically, which is what the state section of your exam tests.
