Colorado Broker Associate Elena is affiliated with Employing Broker Frank. Elena receives an earnest money deposit of $15,000 from a buyer. Without Frank's knowledge, Elena deposits the funds into her personal checking account, planning to transfer them to the brokerage trust account the following week. Under Colorado law, which of the following most accurately describes Elena's conduct and potential consequences?
Correct Answer
A) Elena has committed commingling of client funds, which is a violation of Colorado license law and CREC rules, subject to disciplinary action including license revocation
Under CREC rules and C.R.S. § 12-10-217, depositing client funds (earnest money) into a personal account rather than the required trust account constitutes commingling — the mixing of client funds with personal funds. Commingling is a serious violation of Colorado license law regardless of intent or the planned timeline for transfer. CREC may impose disciplinary action including fines, suspension, or revocation of Elena's license. Frank, as the Employing Broker, may also face scrutiny for failure to supervise.
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Key Terms:
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FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
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