Property Management
In Washington, a residential property manager who improperly applies tenant security deposits to operating expenses is committing:
AA minor accounting error
BCommingling and conversion of client funds, a serious violation of RCW 18.85 and 59.18✓ Correct
CA breach of the management agreement only
DA zoning violation
Explanation
Using security deposits for operating expenses is both commingling (mixing client funds with operating funds) and conversion (using client funds for unauthorized purposes). These are serious violations that can result in license revocation and criminal charges.
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
ZoningLocal government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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