What is 'commingling' and why is it a serious violation for real estate agents?

Commingling is mixing a client's funds — most commonly earnest money — with the agent's or brokerage's own operating funds. It is a serious violation of real estate license law in every state. Client funds must be deposited promptly into a designated trust or escrow account, kept separate from the brokerage's business accounts, and disbursed only as authorized by the contract or by court order. Commingling can result in license suspension or revocation, fines, and criminal charges in extreme cases. The reason for the strict rule: clients trust their agent with sometimes-substantial sums of money, and the integrity of the entire industry depends on those funds being absolutely safe. 'Conversion' (using client funds for the agent's own purposes) is the most extreme form and is treated as theft.