Commingling: mixing client money with the brokerage's — license killer
Before you read
Test yourself first: 5 questions
Question 1 of 5
A broker manages several rental properties and collects monthly rents on behalf of owners. Where should these rent collections be deposited?
Answer: B. Rents collected on behalf of property owners are other people's money and must be held in a trust account, separate from the broker's personal and operating funds.
Question 2 of 5
Commingling occurs when a broker does which of the following?
Answer: B. Commingling is the improper mixing of clients' funds with the broker's own funds; trust money must be kept separate from the broker's personal and operating accounts.
Question 3 of 5
What is a trust (escrow) account used by a real estate broker primarily designed to hold?
Answer: B. A trust or escrow account holds funds belonging to others, such as earnest money or rents, that the broker is entrusted with until they are properly disbursed.
Question 4 of 5
An agent who keeps a client's earnest money in a proper trust or escrow account and never mixes it with personal funds is fulfilling the duty of:
Answer: B. The duty of accounting requires the agent to safeguard and properly account for all money and property belonging to others, prohibiting commingling.
Question 5 of 5
An agent encourages a buyer to look in a different school district 'where they would feel more comfortable with people like them,' steering them away from an integrated area. This violates the Fair Housing Act because it constitutes:
Answer: B. Directing a buyer toward or away from neighborhoods based on the racial or other protected makeup of residents is illegal steering, regardless of whether the agent frames it as helpful advice.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Client funds go in the TRUST/escrow account — promptly, per state deadline
- Commingling: mixing client money with the brokerage's — license killer
- Conversion: SPENDING client money — worse, often criminal
- Small broker float to cover bank fees is allowed in many states (know the cap)
- Records: every deposit/disbursement documented and reconciled
Trust Accounts — Other People's Money: FAQs
Is Trust Accounts — Other People's Money on the real estate exam?
Yes. Brokerage & Practice is a scored domain on the real estate licensing exam, and this topic appears in the national portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
