Commingling and Conversion
Commingling is the illegal act of mixing client trust funds with a broker's personal or business operating funds; conversion is the misappropriation of those funds.
Commingling is a serious violation of real estate law. It involves mixing client funds, such as earnest money deposits or rent payments, with the broker's own funds. This makes it difficult to track and account for the client's money. Conversion is an even more egregious offense, where the broker uses the client's funds for their own personal or business expenses. Both commingling and conversion are grounds for severe disciplinary action by FREC, including license revocation and potential criminal charges.
A broker deposits a client's $10,000 earnest money check into their business operating account instead of an escrow account. This is commingling. If the broker then uses that $10,000 to pay their office rent, that is conversion.
Clearly differentiate between commingling (mixing funds) and conversion (using funds for unauthorized purposes). Understand that both are illegal and carry severe consequences.
Related Terms
Practice Questions
FREC requires brokers to reconcile escrow accounts:
FREC can impose a fine up to:
Commingling in Florida means:
Related Concepts
Florida real estate licenses must be renewed biennially, and sales associates have specific post-license education requirements for their first renewal.
Brokers in Florida have strict responsibilities for managing escrow accounts, including monthly reconciliation and proper handling of trust funds.
Florida brokers are required to maintain transaction records and escrow records for a minimum of five years.
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.