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Real estate glossaryGeorgia-specific rule

Conversion

Conversion is the unauthorized taking, use, transfer, or exercise of control over money or property belonging to another person, including trust funds held in a real estate transaction.

Exam area: State Laws and Rules

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What does “conversion” mean in real estate?

Conversion is the unauthorized taking, use, transfer, or exercise of control over money or property belonging to another person, including trust funds held in a real estate transaction.

How is “conversion” different from the closest wrong answer?

Commingling concerns where funds are mixed. Conversion concerns wrongful dominion or use. Conversion is the more serious misuse even if account balances are later restored.

What is the Georgia-specific rule?

Georgia can discipline a licensee for mishandling or converting entrusted funds, and criminal or civil consequences may exist independently of license discipline.

Worked exam example

Scenario

A broker uses a buyer's earnest money to cover the brokerage payroll and plans to replace it after another closing.

What is the most common exam trap?

Trap correction

An intention to repay is not authorization to borrow entrusted money.

Original exam check

Apply the definition

A broker's payroll comes up short, so the broker spends a buyer's earnest money from the trust account and refills it a week later after another closing. Which description is most accurate?

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Related terms to learn next

Commingling

Commingling is the improper mixing of money belonging to clients, customers, tenants, owners, or other persons with a broker's personal or operating funds.

Trust funds

Trust funds are money or property a Georgia broker receives on behalf of another person in a real estate matter, including earnest money, rents, security deposits, and other client or customer funds when held by the broker.

Trust account

A trust account is a separate, federally insured account in which a Georgia broker holds money belonging to others in connection with real estate activity, including earnest money when the broker receives it.

Unfair practice

An unfair practice is conduct prohibited by Georgia real estate license law or Commission rules because it is dishonest, misleading, incompetent, unsafe, or inconsistent with the duties of a licensee.

Recommended next complete lesson

Continue with State Laws and Rules complete lesson. It places this term inside the full rule, worked examples, exam traps, and mixed practice required for mastery.
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