California Real Estate SalespersonLaws of Agency and Fiduciary DutiesMedium
A broker deposits $200 of personal funds into the trust fund bank account and leaves it there permanently for record-keeping convenience. How is this practice classified under California Real Estate Law?
- AIllegal commingling because any personal funds in a trust account violate the law
- BConversion, because the funds are used for the broker's business expenses
- CPermitted only if the seller consents in writing
- DPermitted under Commissioner's Regulations, which allow up to $200 of the broker's own funds to cover bank service charges
Show answer & explanationAnswer & explanation
Correct answer: D. Permitted under Commissioner's Regulations, which allow up to $200 of the broker's own funds to cover bank service charges
California Commissioner's Regulations allow a broker to maintain a limited amount (up to $200) of personal funds in the trust account solely to cover bank service charges, which is a narrow exception to the general prohibition against commingling.
Why the other options are wrong
- A. Overbroad — a specific regulatory exception exists.
- B. Conversion involves misappropriation of client funds, not this exception.
- C. No client consent is required for this regulatory exception.
Trust Fund $200 Exception
A regulatory exception permitting a broker to keep up to $200 of personal funds in the trust account solely to cover bank service charges.
- General rule prohibits commingling personal and client funds.
- $200 exception is narrowly limited to bank charges.
- Exceeding this amount or using it for other purposes violates trust fund rules.
Memory trick: '$200 for the bank, not for your snack.'