The act of a broker using an earnest money deposit for personal expenses is an example of what?

The act of a broker using an earnest money deposit for personal expenses is classified as conversion. Conversion refers to the unauthorized use or misappropriation of someone else's property for one's own personal use or benefit. In real estate, earnest money deposits are funds provided by a buyer to demonstrate their serious intent to purchase a property. These funds are meant to be held in trust, often in a separate account, until the transaction closes.

When a broker uses these funds for personal expenses, they are effectively taking control of someone else's money and using it inappropriately, which constitutes a breach of trust and fiduciary duty. This action is not only unethical but also illegal, placing the broker in a position of liability for such misuse.

While co-mingling involves mixing personal funds with client or escrow funds, in this instance, the emphasis is on the improper use of the money rather than just the mixing. Fiduciary responsibility relates more broadly to a broker's obligation to act in the best interests of their clients rather than the specific act of misappropriation. Fraud, while it involves deception, may not accurately depict this scenario as the primary issue is the misuse of entrusted funds, rather than intent to deceive. Therefore, conversion is the most fitting term for this