Trust Funds
Conversion of trust funds occurs when a broker:
AInvests trust funds in an interest-bearing account with client permission
BUses client trust funds for the broker's personal use or business expenses✓ Correct
CReturns earnest money to a buyer after a failed transaction
DDeposits trust funds one day late
Explanation
Conversion is the misappropriation of trust funds — using funds held in trust for purposes other than those intended, such as paying broker expenses or personal bills. Conversion is a criminal act as well as a grounds for license revocation.
Related California Trust Funds Questions
- What is 'commingling' of trust funds?
- A broker's trust fund account must be reconciled:
- The illegal use of client trust funds for the broker's personal benefit is called:
- A salesperson receives an earnest money check from a buyer. What must the salesperson do with the check?
- Which California law specifically governs a real estate broker's obligations with respect to trust funds?
- Which of the following is TRUE about salesperson trust fund accounts?
- A broker may keep a maximum of how much of the broker's own funds in the trust account without it being considered commingling?
- A broker who holds a disputed earnest money deposit and cannot get agreement from the parties may:
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