Key Takeaways
- Brokerages fail due to market downturns, over-expansion, trust account fraud, and technology disruption—thin margins make them vulnerable.
- Brokerage failure during active transactions can freeze trust funds, displace agents, and delay closings by weeks.
- Minimize trust account exposure by keeping deposits at the minimum and holding funds at the title company when possible.
- Maintain independent copies of all transaction documents and know your state's real estate recovery fund process.
This track contains subscriber-only lessons
Explore free tracks in this area of study, or subscribe for full access.
Browse available tracks"Listing Traps, Compliance Failures & Post-NAR Settlement Risks" is a Pro track
Upgrade to access all lessons in this track and the entire curriculum.
Test Your Knowledge
1.What is the primary risk to investors when a brokerage becomes insolvent during an active transaction?
2.What protective measure can investors take against brokerage insolvency risk?
3.What is a state real estate guarantee fund?