Commingling

Definition

Mixing the firm's own money with the rents and deposits it holds for other people.

Why It Matters

The trust account is the artifact and this is the failure it exists to prevent, in both directions: company money sitting in trust, and trust money paying company bills. California treats it as grounds for discipline of the license itself, which is what makes it the diligence item that reprices deals. Collecting rent is licensed activity there, so the rule reaches managers and not only sales brokers, and the commissioner may suspend or revoke on a written complaint. The exceptions are narrow and are where honest but sloppy operators fail: a small float of the firm's own money for bank charges, and earned management fees that have to leave the account inside twenty-five days. Two costs land on a buyer. A trust shortage found after closing is the buyer's to fund, and it equals whatever the seller borrowed from deposits to make payroll. And the license does not convey, so name the broker of record for day one before agreeing a price.