EAQE Agency management and supervision question: Pearl River Realty agrees to hold a HK$300,000 deposit

EAA EAQEAgency management and supervision

Pearl River Realty agrees to hold a HK$300,000 deposit as stakeholder for the vendor and purchaser of a flat. According to the Study Guide, which of the following should the agency do? (i) State clearly when and in what circumstances the money is to be released (ii) State what is to be done with the money if the parties fall into dispute (iii) Make provision for the agency to be indemnified against claims by any party (iv) Pay the money into the branch manager's personal savings account until completion

A (i), (ii) and (iii) only
B (i) and (ii) only
C (ii), (iii) and (iv) only
D (i), (ii), (iii) and (iv)

Show the answer and explanation

Answer: A. (i), (ii) and (iii) only

Answer: (i), (ii) and (iii) only. (i) True. The terms of the stakeholding should state when and in what circumstances the money is released. (ii) True. They should state what happens to the money if the parties dispute. (iii) True. The agency should ensure provision is made to indemnify it against claims by any party. (iv) False. Client money must go into a trust account at an authorised institution, never a staff member's personal account. Rule: Stakeholding terms should be clear on release and disputes, protect the agency with an indemnity, and legal advice should be sought; the money itself is client money held in a trust account. Source: EAA, A Study Guide to Estate Agency Law and Practice, Part 8, paras 20 and 21; Practice Regulation (Cap. 511C), section 12; as at Oct 2026

Common mistake

Agreeing to hold a deposit without written release and dispute terms.

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Kowloon Homes Agency gave Ms Tse a copy of her personal data in answer to an access request. She asks for her income figure to be corrected, and the agency agrees it is wrong. Four months ago the agency passed the figure, with her consent, to a bank for her mortgage application, and the bank is still using it. What must the agency do?Kowloon Homes Agency's written rules forbid salespersons to accept cash from clients. Salesperson Derek Ip, acting for Mrs Lam on a purchase, accepts HK$200,000 in cash as the initial deposit, promising to pass it to the vendor's solicitors, and disappears with it. Which statement is most accurate about Mrs Lam's claim against the agency?Lotus Realty plans to pass purchaser clients' names and phone numbers to an unrelated mortgage brokerage, which will pay HK$200 per name and will market its own loans to them. Which statement is correct?

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An original question written to the published EAQE syllabus. Figures in the explanation carry their effective dates; check them against the current law before relying on them. Independent exam practice. Not affiliated with or endorsed by the Estate Agents Authority (EAA) or the examination administrator.