Broker Tom's trust account currently holds $15,000 in client earnest money deposits. His brokerage is experiencing a cash flow shortage, and Tom temporarily transfers $3,000 from the trust account into his operating account to cover payroll, intending to replace the funds within two days. Under Connecticut law, which of the following best describes Tom's conduct?
Correct Answer
D) Tom's conduct constitutes conversion and is a violation of Connecticut license law regardless of his intent to repay
Under CGS § 20-324e and Connecticut license law, the unauthorized use of trust funds for any purpose other than the benefit of the client for whom they are held constitutes conversion — the most serious form of trust account violation. Tom's intent to repay the funds is irrelevant under Connecticut law. This conduct can result in license revocation, criminal prosecution, and civil liability under CUTPA (CGS § 42-110a et seq.).
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Related Topics & Key Terms
Key Terms:
Related Concepts
Price fixing is an illegal antitrust practice in which competing real estate brokerages agree to charge the same commission rates, fees, or other pricing for their services. It is a per se violation of the Sherman Antitrust Act.
Florida brokers are required to maintain transaction records and escrow records for a minimum of five years.
A tie-in arrangement is an illegal antitrust practice in which a seller conditions the purchase of one product or service on the buyer's agreement to purchase a separate product or service.
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