Leasing License Practice Exam

Whose funds are exempt from being placed in an FDIC account?

1. Investors who provide capital

2. Owners who receive security deposits

3. Tenants who prepay rent

4. Landlords managing multiple properties

The correct answer is: Owners who receive security deposits

The correct answer pertains to owners who receive security deposits, as these funds are typically categorized differently under legal and regulatory frameworks. Security deposits are considered the property of the tenant until certain conditions are met, such as the termination of the lease agreement and the reconciliation of any claims for damages or unpaid rent. Because these funds are intended to be held for the benefit of the tenants until the lease concludes, they may not be treated in the same manner as the landlord's operational funds that can be placed in an FDIC-insured account. In contrast, capital provided by investors, prepaid rent from tenants, and funds from landlords managing multiple properties do not share the same exemptions. These funds generally belong to the landlord or are used in a manner linked to the landlord's business operations. Hence, the funds from security deposits are treated separately to ensure that the tenants' rights to those funds are protected until the lease obligations are fulfilled.