What is the act of depositing a buyer's deposit check into the broker's business operating account called?

The act of depositing a buyer's deposit check into the broker's business operating account is referred to as commingling. Commingling occurs when funds that are supposed to be kept separate, such as client deposits or trust funds, are mixed with the broker's own operating funds. In real estate practice, this is a significant issue because it can lead to improper handling of clients' money and can potentially violate laws and regulations designed to protect consumers.

When a broker accepts a deposit from a buyer, that money is meant to be held in trust, which should be kept separate from the broker's operational funds to ensure accountability and security for the buyer's investment. By commingling these funds, a broker can lose the fiduciary trust placed in them by their clients.

Good practices require that these deposits be placed into a designated trust account, where they can be safeguarded until appropriate disbursement occurs, such as at the closing of a property sale. This is an essential part of maintaining ethical standards in real estate transactions, as it delineates the broker's responsibilities toward their clients, ensuring that funds are handled properly and transparently.