If a broker takes earnest money from a client and deposits it into their personal banking account, what term describes this action?

The action of a broker taking earnest money from a client and depositing it into their personal banking account is referred to as commingling. Commingling occurs when a broker mixes client funds with personal funds or funds not designated for that client's transaction. In real estate practice, earnest money is meant to be held in a separate escrow account specifically designated for those types of funds to ensure that they are safeguarded and used appropriately within the context of the real estate transaction.

This separation is crucial because it maintains the integrity of the transaction and protects the client's interests. By depositing the earnest money into a personal account, the broker violates the ethical and legal standards of handling client funds, as it creates potential risks of misappropriation and does not provide the necessary security for the client's deposits.

In contrast, the other options pertain to different scenarios: conversion typically refers to taking ownership of someone else's property in an unauthorized manner, misrepresentation involves providing false information or failing to disclose essential facts, and fraud involves intentional deceit for personal gain. Commingling is specifically the act of mixing different types of funds, which is what characterizes the broker's incorrect handling of the earnest money in this scenario.