Trust Funds
Conversion of trust funds occurs when a broker:
ADeposits client funds into the correct trust account
BUses client funds for personal or business purposes✓ Correct
CFails to deposit funds on time
DMixes operating and trust funds
Explanation
Conversion is the most serious trust fund violation — it occurs when a broker uses client funds for their own personal or business purposes. It is considered theft and can result in criminal prosecution and license revocation.
Related California Trust Funds Questions
- Conversion of trust funds occurs when a broker:
- A buyer's earnest money is being held by the listing broker. The transaction falls through and there is a dispute about who is entitled to the funds. What should the broker do?
- Under California law, a real estate broker must deposit trust funds received into the trust account no later than:
- A broker's trust account shortage (the bank balance is less than the sum of all beneficiary ledger balances) most likely indicates:
- A DRE audit of a broker's trust account reveals that the balance of individual client ledgers is less than the total bank balance. This condition is called:
- Can a property management broker combine the security deposits for multiple tenants in a single trust account?
- A broker who violates trust fund regulations is subject to which of the following penalties?
- A salesperson receives an earnest money check from a buyer. What must the salesperson do with the check?
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