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What happens to a broker if they use money from a trust fund?

I know for a sales agent their license would be terminated, but what about a broker?
  • August 25 2013 - US
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Answers (2)

In many states, brokers are licensed too. So it could involve suspension or revocation of their license. The most common problem with money held in escrow is when brokers co-mingle funds in the same account. They're suppose to keep escrowed money separate from their business account.

In the event of fraud, most brokers carry insurance to cover the loss. As for punishment, that depends on the severity of the crime. Most often there's a fine and possible revocation of license. But most real estate commissions lack the ability to criminally prosecute. That's up to the local district attorney.
  • August 25 2013
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Profile picture for Connie Klemme

the punishment likely varies by state and if it is a first offense and a one time thing that will be vary different than if an audit were to reveal it had repeatedly happened. There may be loss of license permanently there may be lesser consequences-a panel would decide. What state are you in?  the possible punishments very likely vary by state.  Perhaps if you reply with your state someone will provide more useful detail on this matter.  Regardless, it is unacceptable and unprofessional behavior.

As for a sales agent- they should  have absolutely no access to a trust fund in the first place, at least in my state, funds are always kept in the broker's trust account not an agents.  Co-mingling is a serious issue.

  • August 25 2013
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