Broker Sandra maintains a trust account for her real estate brokerage in New Orleans. At the end of the month, she notices the trust account balance is $800 higher than the total of all client deposits she is holding. Which of the following best describes this situation under Louisiana license law?
Correct Answer
C) The overage constitutes commingling, meaning Sandra has mixed personal or brokerage funds with client funds in the trust account
When a trust account balance exceeds the total of client deposits being held, the excess funds represent personal or brokerage funds that have been mixed with client funds — a practice known as commingling. Under Louisiana license law, commingling is a serious violation. Trust accounts must contain only client funds, and brokers must perform regular reconciliations to ensure the account balance matches the total of all client deposits held.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.
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