247SimpleTests
Real Estate · Trust Accounts and Recordkeeping

What is commingling, and why is it prohibited for brokers?

Correct answer

Mixing client or third-party funds (such as earnest money) with the broker's own operating funds, which is prohibited because it endangers client money and obscures recordkeeping

  1. A Combining two listings into one
  2. B Mixing client or third-party funds (such as earnest money) with the broker's own operating funds, which is prohibited because it endangers client money and obscures recordkeeping
  3. C Depositing earnest money into a trust account
  4. D Paying a referral fee to another broker

Why this is the answer

Commingling is the improper mixing of money that belongs to clients or third parties — such as earnest money deposits, rents, or security deposits — with the broker's own business or personal funds. It is prohibited because client funds must be kept separate and identifiable in a trust (escrow) account so they are protected and traceable. Commingling can put client money at risk if the broker has financial trouble and makes it impossible to account accurately for each party's funds. A related violation, conversion, is actually using those funds for the broker's own purposes. Trust-account integrity is one of the most heavily disciplined areas, so brokers must keep client money strictly segregated.
Source: ARELLO Broker Trust Account Violations

Practice more questions

This question is from our Real Estate License Practice Tests practice test. Take the full practice test to test your knowledge across all Trust Accounts and Recordkeeping and other topics.

Take the Broker (National) practice test →

New to this exam? Our Real Estate exam guide explains the format, scoring, and how to prepare.

Related questions

Trust Accounts and Recordkeeping

What is a real estate trust account (escrow account)?

 Trust Accounts and Recordkeeping

What is 'commingling' in real estate brokerage and why is it prohibited?

 Trust Accounts and Recordkeeping

What is the standard procedure for handling earnest money in a real estate transaction?

 Trust Accounts and Recordkeeping

What must a broker do if a buyer demands return of their earnest money and the seller refuses, both claiming the money?

State-specific guides

Need information for your state? Our state guides cover local requirements, fees, and what to expect on exam day.

California Texas Florida New York Pennsylvania Illinois Ohio Georgia

Recommended study materials

Study guide

Real Estate License Exam Prep 3rd Ed. (Performance Programs)

National and state portion prep, contracts, agency law, fair housing, and math — the industry standard.

Check Price → Study guide

Modern Real Estate Practice 21st Ed. (Dearborn)

The most widely used real estate principles textbook: principles, law, practice, and math in one volume.

Check Price → Study guide

Real Estate Math Express (Dearborn)

Commission calculations, financing, proration, area, and all exam math explained step by step.

Check Price →

As an Amazon Associate, CJ Affiliate, and AWIN publisher we earn from qualifying purchases. Links above are affiliate links. Full disclosure →