License Law
The illegal mixing of a client's funds with a broker's personal or business funds.
Commingling occurs when a real estate broker deposits client funds, such as earnest money or security deposits — into their personal or business operating account instead of a separate trust or escrow account. It is a violation of NY Real Property Law Article 12-A and grounds for license suspension or revocation. The more serious offense is conversion — actually using those client funds for personal purposes. A broker can commingle without converting, but cannot convert without first commingling.
Exam Tip
Commingling = mixing funds. Conversion = spending them. Both are violations, but conversion is more serious.
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