Security deposits and advance rents may be commingled with which funds?

• A. The landlord's other funds
• B. A separate escrow account
• C. Public funds
• D. Tenant's funds only

Answer: (A)

The main idea here is how tenant money is managed by a landlord. In this item, the rule being tested allows security deposits and advance rents to be commingled with the landlord’s other funds, meaning these deposits can be treated as part of the owner's general cash rather than kept in a separate, isolated account. The important point is that even though the money isn’t isolated in its own escrow, it still belongs to the tenants and must be identifiable and returned when due, so proper accounting is essential. While keeping deposits in a separate escrow account is a safer, common practice, this choice reflects the policy the question is testing. The other options describe scenarios that are not what the item focuses on—public funds isn’t appropriate for tenant deposits, and treating the deposits as only tenant funds ignores the landlord’s control over the money.