What does "commingling" mean in real estate practice?

"Commingling" in the context of real estate practice specifically refers to the illegal act of mixing client funds with personal funds. This practice violates ethical standards and legal regulations established to protect clients' money. When real estate professionals receive client funds, such as earnest money, they are required to hold these funds in a trust account that is separate from personal or business accounts to prevent any misuse or misappropriation.

This separation is crucial because it ensures that client money is not at risk of being used for the agent's personal expenses or financial obligations. Commingling undermines trust and can lead to serious legal repercussions, including loss of licenses and financial liabilities. Therefore, understanding the implications of commingling emphasizes the importance of maintaining clear and unequivocal boundaries between personal and client finances in real estate transactions.