License Law
The illegal act of a broker using a client's entrusted funds for personal purposes.
Conversion in real estate brokerage occurs when a licensee uses client funds — held in escrow or trust for their own personal benefit. It is a more serious offense than commingling (mixing funds) because it involves actual misappropriation. Conversion is grounds for immediate license revocation and may constitute criminal theft. It can also expose the broker to civil liability for the full amount converted, plus damages.
Exam Tip
Commingling = mixing. Conversion = spending. Conversion is always preceded by commingling, but commingling can happen without conversion.
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License Law
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