What does it mean when client trust funds are used by the broker without the client's permission?

When client trust funds are used by the broker without the client's permission, it is referred to as conversion. Conversion occurs when someone takes control of property or funds that belong to another person, using them for their own purposes without authorization. In the context of real estate, this means that the broker has misappropriated funds that are supposed to be held in trust for the client, thereby violating the trust and the legal obligations associated with managing those funds.

Using a client’s funds without permission is a serious violation of real estate law and ethics. It undermines the trust and fiduciary responsibility that a broker holds towards their clients. In Georgia, as in many other jurisdictions, conversion can lead to disciplinary actions against the broker, including the potential revocation of their license and civil penalties.

The other options, although related to financial management in real estate, do not accurately describe the act of misusing client funds without permission. Commingling refers to mixing a client’s funds with the broker’s personal funds, while escrow is a process of holding funds or documents by a third party until certain conditions are met. Trust fund is a general term used to describe funds held in trust for clients, but it does not specify an unauthorized use of those funds.