What is the exam-ready distinction?
| 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 |
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 1A Georgia broker takes a buyer's earnest money out of the trust account to cover the firm's payroll, planning to put it back next week. How is this best classified?
- A. Only commingling, since the money stayed within the firm
- B. A permitted short-term advance if it is repaid on time
- C. A bookkeeping delay that monthly reconciliation will fix
- D. Conversion, because trust money was used without authority
Show answer and explanation →
Answer: D. Conversion, because trust money was used without authority
Conversion is unauthorized use of another person's money, and paying payroll with a buyer's earnest money is exactly that. Planning to repay does not make the use authorized. The commingling answer understates the problem, since conversion is the more serious, use-based classification.
Question 2A broker deposits the firm's own operating revenue into the trust account that holds clients' earnest money. None of the money is spent. What has occurred?
- A. Commingling, because firm money was mixed with trust funds
- B. Conversion, because the broker controls the trust account
- C. No violation, because none of the trust money was spent
- D. A permitted deposit, because brokers may add their own funds
Show answer and explanation →
Answer: A. Commingling, because firm money was mixed with trust funds
Commingling is improperly mixing a broker's own money with money held for others, and it is a violation even if nothing is spent. Operating revenue is not one of the narrow broker-fund uses that GREC's trust account rule permits. Deciding there is no violation because nothing was spent is the trap, since keeping the money separate is itself the duty.
Question 3Which deposit of a broker's own money into a Georgia trust account can be permitted when it is clearly identified in the records?
- A. Personal savings kept there to earn a better interest rate
- B. Funds to meet the account's minimum balance or its charges
- C. Operating revenue parked there until the firm's bills are paid
- D. Money the broker plans to lend to agents as commission advances
Show answer and explanation →
Answer: B. Funds to meet the account's minimum balance or its charges
GREC's trust account rule narrowly allows identified broker funds for minimum balances, account charges, and properly accounted earned commissions. Covering the account's minimum or its bank charges fits that exception. Personal savings and operating money are commingling no matter how carefully they are labeled.
Ready to move on?
You have this distinction down when all of these are 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 key fact.
- Explain the rule or fact that makes each distractor 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. Earnest money handling ends at closing, and the next article explains who runs a Georgia closing, a Georgia attorney, and where filling in a form stops and practicing law begins.
Return to the complete exam-concept library or the State Laws and Rules hub.