What is commingling in real estate?

Commingling in real estate refers to the mixing of a real estate agent's personal funds with their client's funds. This is considered a violation of ethical standards and can lead to serious legal consequences for the agent.

Commingling typically occurs when an agent deposits a client's funds, such as a security deposit or earnest money, into their personal bank account instead of a designated trust account. This behavior is prohibited because it can make it difficult to track and account for client funds, increasing the risk of fraud or theft.

To prevent commingling, real estate agents are required to keep client funds separate from their personal funds by holding them in a trust account specifically designated for client funds. Agents must also keep detailed records of all transactions involving client funds to ensure transparency and accountability. Failure to adhere to these standards can result in disciplinary action by the state real estate commission and potential legal action by the affected clients.