Tom is a Washington licensed broker who is also the designated broker of his own firm. He receives a $20,000 earnest money check from a buyer client. Tom is short on personal funds and deposits the earnest money into his business operating account, intending to transfer it to the trust account the next day. Under Washington law, Tom has most likely committed which of the following violations?
Correct Answer
A) Commingling of client funds with business funds, a violation of RCW 18.85
Under RCW 18.85 and WAC 308-124D, depositing client earnest money into a business operating account rather than a designated trust account constitutes commingling — the illegal mixing of client funds with a broker's personal or business funds. This is a serious violation of Washington DOL rules regardless of intent or how briefly the funds are held in the wrong account. Commingling can result in license suspension or revocation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
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