Trust Funds
A salesperson who works for Broker A receives an earnest money deposit. Without telling Broker A, the salesperson deposits it into the salesperson's own personal account. This is:
AAcceptable as long as the funds are forwarded to broker before closing
BOnly a minor violation if the amount is under $1,000
CBoth commingling and potentially conversion — grounds for disciplinary action✓ Correct
DPermitted if the buyer consented in writing
Explanation
A salesperson has no authority to hold trust funds in their personal account. Depositing client funds into a personal account is commingling (and potentially conversion if funds are used or go missing). This is a serious violation that can result in both criminal charges and license revocation for the salesperson — and possibly the broker.
Related California Trust Funds Questions
- A broker receives an earnest money check made out to the seller. The buyer instructs the broker to hold the check uncashed until offer acceptance. The broker MUST:
- A broker who maintains a property management business must:
- Which of the following is NOT a permissible disbursement from a broker's trust account?
- A broker's trust fund account must be maintained at:
- What is 'conversion' in the context of trust funds?
- A property manager receives a security deposit from a tenant. Under California Civil Code, residential security deposits may NOT exceed:
- A broker may maintain a personal (broker's) funds balance in the trust account of up to how much to cover bank service charges?
- Which of the following records is a broker required to maintain for the trust fund account?
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