Delaware License LawIntermediateDelaware Exam
What is 'conversion' of client funds under Delaware real estate law?
AConverting a residential property to commercial use
BThe illegal use of client escrow or trust funds by the broker for the broker's own purposesCorrect
CConverting a lease agreement to a purchase contract
DSimply the formal legal process of converting an existing housing cooperative into a condominium structure
Why The illegal use of client escrow or trust funds by the broker for the broker's own purposes Is Correct
Answer B: The illegal use of client escrow or trust funds by the broker for the broker's own purposes
Conversion is the unauthorized taking or use of client funds — using escrow or trust funds for personal or business expenses. It is distinct from (and more serious than) commingling.
Key Delaware License Law Terms in This Question
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Key Terms to Know
Escrow
A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
State-Specific Concepts
Trust Account Rules
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