description in in general terms only as the law varies with state or
monies include the proceeds of any agency transaction received by a
licensee from any person prior to accounting to the owner or vendor.
For example, the deposit on a property sale, rent, proceeds of a
livestock sale either by auction or private treaty, and any auction
smith receives $25 000 being the customary 10% deposit from the
purchaser on the purchase of a property for $250 000 and banks it in
his trust account. Eventually he receives advice that the sale has
been settled between the vendor and purchaser and he is directed to
account to the vendor for the deposit held. John is now entitled to
look to the vendor for his commission as the sale has been completed.
If his commission is $12 500. Therefore, out of the $25 000 deposit
held, he would forward a cheque for $12 500 to the vendor and would
withdraw by cheque the sum of 12 500 for himself and deposit in the
John Smith Business Account.
held in the John Smith Business Account would be used to pay expenses
incurred in running the agency. Periodically John will withdraw
amounts from this account, being drawings from expected profits. Such
amounts would be deposited to the John Smith Account and used to pay