Commingling
National Real Estate Exam glossary · Practice Of Real Estate
Definition
The prohibited mixing of client or customer funds (such as earnest money or security deposits) with the broker's own operating funds. Commingling is an offense in itself; the further, more serious step of using those funds for the broker's own purposes is conversion.
Commingling in plain English
A real-estate broker often holds other people's money for safekeeping — like the deposit a buyer puts down or a tenant's security deposit. Commingling is the illegal act of dumping that money into the broker's own business bank account instead of keeping it separate. Imagine a babysitter tossing your allowance into their own wallet — even if they never spend a cent, mixing it up is already a violation because now nobody can tell whose money is whose. If the broker goes further and actually spends your money on themselves, that's an even worse crime called conversion.
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