What is considered commingling in real estate transactions?

Commingling in real estate transactions refers specifically to the practice of mixing personal funds with client funds. This is critical to understand because it poses ethical and legal risks. Real estate professionals are required to handle client funds, such as earnest money or deposits, with a high level of integrity. Keeping personal and client funds separate is essential to ensure transparency and accountability. When personal funds are mixed with client funds, it can become difficult to track each type of fund, leading to potential misuse or loss of client money.

In contrast, depositing client funds into an escrow account is a proper procedure in real estate transactions. It involves placing the funds in a neutral third-party account to ensure they are available for use when necessary and protects the interests of both the buyer and seller. Similarly, separating client funds into different accounts is also a proper practice because it helps manage funds more accurately rather than commingling them. Holding client funds in a trust account is another appropriate action, as it is designed to safeguard those funds until they are needed for the transaction.