Broker Malia holds client funds in her brokerage trust account. She is experiencing cash flow problems and temporarily uses $10,000 of client funds to cover her brokerage operating expenses, intending to replace the funds within two weeks. Under HRS Chapter 467, Malia's action is best described as:
Correct Answer
D) Conversion, which is a serious violation and grounds for license revocation or suspension
Using client funds held in trust for personal or business expenses — even temporarily and with intent to repay — constitutes conversion under HRS Chapter 467. Conversion is one of the most serious violations in Hawaii real estate law and is grounds for license revocation or suspension, as well as potential criminal liability. The intent to repay does not mitigate the violation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
In real estate, the distinction between an independent contractor and an employee determines tax treatment, liability, and the level of control a broker may exercise over the agent's daily activities. Most real estate agents operate as independent contractors.
Florida real estate licenses must be renewed biennially, and sales associates have specific post-license education requirements for their first renewal.
License requirements are the mandatory qualifications—including pre-licensing education, examination, and background checks—that a person must satisfy before legally practicing real estate. These requirements are established and enforced by each state's real estate commission.
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