What is the exam-ready distinction?
| Roadmap post | 229 of 500 |
|---|---|
| Official syllabus topic | Georgia Laws and Rules: Trust Accounts, Commingling, Conversion, and Broker Control |
| Official PSI area | State Laws and Rules |
| Published weight | 16 of the 52 Georgia questions |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
| Content checked through | August 2, 2026 |
The Rule
PSI publishes a weight for the complete official area, not a guaranteed count for this individual comparison. Use the source, document, actor, event, and timing stated in the question before applying a memorized definition.
Side-by-side comparison
Read across each row. The terms are deliberately compared on identical dimensions so the difference remains clear when the exam hides the vocabulary inside a scenario.
| Decision dimension | Commingling | Conversion |
|---|---|---|
| Conduct | Improperly mixes broker or firm money with money held for others | Unauthorized use or control of money or property belonging to another |
| Harm | Destroys required separation and accounting even without proven spending | Deprives the owner of authorized control or use |
| Example | Depositing operating revenue into a client trust account outside permitted exceptions | Using earnest money to pay firm payroll |
| Georgia exception caution | Rule 520-1-.08 permits clearly identified broker funds for specified minimum-balance, charge, and earned-commission purposes | Those narrow accounting permissions do not authorize personal use of trust funds |
Decision rule
Georgia-specific distinction
Worked example
Scenario. A Georgia broker withdraws a buyer's earnest money from the trust account to cover the firm's payroll, intending to replace it next week.
Reason it through. The buyer's funds were used for an unauthorized firm purpose. An intention to repay does not turn the use into an authorized disbursement.
Answer. The conduct is conversion and also creates trust-account and commingling concerns.
Common exam traps
- Requiring permanent theft before finding conversion
- Calling every permitted service-charge balance commingling
- Assuming intent to repay cures unauthorized use
- Ignoring the ledger and monthly reconciliation
Original practice questions with detailed explanations
These are original instructional questions mapped to the July 1, 2026 PSI outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.
Question 1What is the unauthorized use of a client's trust money for firm expenses?
- A. A permitted minimum balance
- B. Conversion
- C. Constructive notice
- D. A lawful commission split
Show answer and explanation →
Answer: B. Conversion
Conversion is correct. Commingling is improper mixing of a broker's money with trust funds. Conversion is unauthorized use or control of another person's money or property. A single act can involve both, but conversion is the more serious use-based classification. Georgia permits only limited, clearly identified broker funds in a trust account for purposes stated in Rule 520-1-.08. The remaining options, A permitted minimum balance; Constructive notice; A lawful commission split, do not match the controlling category or fact.
Question 2A Georgia broker withdraws a buyer's earnest money from the trust account to cover the firm's payroll, intending to replace it next week.
- A. It is permitted if the broker plans to replace the money.
- B. It is only a bookkeeping delay with no violation.
- C. The conduct is conversion and also creates trust-account and commingling concerns.
- D. Earnest money becomes the broker's money when deposited.
Show answer and explanation →
Answer: C. The conduct is conversion and also creates trust-account and commingling concerns.
The buyer's funds were used for an unauthorized firm purpose. An intention to repay does not turn the use into an authorized disbursement. The supported conclusion is: The conduct is conversion and also creates trust-account and commingling concerns. The other choices replace those controlling facts with a neighboring concept or an unsupported absolute rule.
Question 3What should a candidate identify first when comparing Commingling Versus Conversion?
- A. The option with the longest definition, without classifying the facts.
- B. A memorized Georgia rule, even when the question asks for a national concept.
- C. The answer that sounds most favorable to one party, regardless of the document or event.
- D. Trace whose money it is, where it was deposited, how the ledger identifies it, whether a rule permits the broker funds, and whether anyone used or disbursed trust money without authority.
Show answer and explanation →
Answer: D. Trace whose money it is, where it was deposited, how the ledger identifies it, whether a rule permits the broker funds, and whether anyone used or disbursed trust money without authority.
Trace whose money it is, where it was deposited, how the ledger identifies it, whether a rule permits the broker funds, and whether anyone used or disbursed trust money without authority. That sequence identifies the legal category before the label. Definition length ignores the facts, jurisdiction confusion answers a different question, and sympathy cannot replace the document, event, calculation, or governing rule.
Mastery tracking
Mark this distinction mastered only when every statement is true.
- Define every compared term without using the other term as the definition.
- Rebuild the comparison table from memory.
- State the decision rule and Georgia distinction without notes.
- Solve the worked example after changing one controlling fact.
- Explain why every trap and distractor is tempting but wrong.
- Answer all three original questions correctly in mixed practice on a later day.
Recommended next lesson
Continue with Georgia Attorney Closing Versus Title or Escrow Closing. Continue to roadmap comparison 230.
Return to the complete exam-concept library or the State Laws and Rules hub.