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Law & License

Conversion

Using money held in trust for others for the broker's own benefit, a serious TRELA violation that can carry criminal penalties.

Quick flashcard

What does Conversion mean on the Texas real estate exam?

Answer: Using money held in trust for others for the broker's own benefit, a serious TRELA violation that can carry criminal penalties.

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Conversion definition

Conversion is taking trust money that belongs to others and using it for personal or business purposes. A broker who spends a buyer's earnest money has converted those funds. Conversion goes beyond commingling because the money is actually used, not just mixed.

Conversion is among the most serious violations a license holder can commit. It can result in license revocation and criminal charges in addition to administrative penalties under TRELA.

Source basis

Definition checked against the official sources below on .

On the exam

When a scenario has the broker actually spending or withdrawing trust money, the answer is conversion, not commingling.

Exam trap

If the funds were only mixed into the wrong account, that is commingling. Conversion requires that the funds were used.

Tested in

Standards of Conduct (9 of 40 Texas State Law)

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This definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.