Trust Funds
The commingling of trust funds occurs when a broker:
ADeposits client funds in a separate trust account
BMixes client funds with the broker's own personal or business funds✓ Correct
CPays a commission from the trust account
DTransfers funds between two client accounts
Explanation
Commingling is the illegal act of mixing client trust funds with the broker's personal or business funds. Trust funds must always be kept separate and segregated. Commingling is a serious violation that can result in license suspension or revocation.
Related California Trust Funds Questions
- A salesperson collects an earnest money deposit from a buyer. What must the salesperson do with these funds?
- A buyer and seller have a dispute over who is entitled to an earnest money deposit after a transaction falls through. The broker should:
- A broker is required to maintain a columnar record (trust fund ledger) for the trust account. The purpose of this record is to:
- A salesperson receives an earnest money check from a buyer. What must the salesperson do with the check?
- What is 'commingling' of trust funds?
- A broker's trust account shortage (the bank balance is less than the sum of all beneficiary ledger balances) most likely indicates:
- A property manager receives a security deposit from a tenant. Under California Civil Code, residential security deposits may NOT exceed:
- What is 'conversion' in the context of trust funds?
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