What potential issue arises if earnest money is commingled with a broker's personal funds?

The potential issue that arises if earnest money is commingled with a broker's personal funds primarily involves a violation of license law. Commingling earnest money with personal funds undermines the integrity of the trust accounts that brokers are required to maintain. License laws are put in place to protect buyers and sellers by ensuring that their funds are handled properly and securely. When a broker mixes these funds, it can lead to mismanagement or misuse, posing risks to clients and potentially leading to legal consequences for the broker. Upholding these regulations is crucial for maintaining ethical standards in real estate practices and protecting the interests of all parties involved in a transaction.