Louisiana License Law
Which of the following constitutes 'conversion' of client funds under Louisiana License Law?
AMoving funds between trust accounts at the same bank
BA broker using client trust fund money for their own personal or business expenses✓ Correct
CPaying a vendor from the trust account for property repairs
DTransferring earnest money to the closing attorney
Explanation
Conversion is the misappropriation of client funds — using money held in trust for clients (earnest money, security deposits) for the broker's own personal or business purposes. It is one of the most serious violations under Louisiana License Law.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Math Concepts
State-Specific Concepts
Trust Account RulesLicense Law
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