Conversion In Real Estate
The legal definition of conversion is the act of using property or funds with which one has been entrusted for purposes other than those for which the property was intended to be used by those who entrusted it.
Conversion Real Estate Meaning
The meaning of conversion in real estate is multifaceted. Real estate conversion can mean different things, and occur under a number of different circumstances. The most common type of real estate conversion is when a real estate agent is entrusted with funds to be deposited in a trust for use in repairing or improving a property. If the agent withdraws funds from the trust to make personal purchases, he has committed the crime of real estate conversion.
At first glance, this can seem fairly innocuous. As long as the real estate agent replaces the money he “borrowed” from the account with his own money, it should be fine, right? Unfortunately, this is not the case. If the realtor puts his own money back into the account, he has actually committed another serious offense: commingling.
Conversion Real Estate Example
Another example of real estate conversion might be the removal of property from a home listed on the market. If an agent removes furniture, decorations, appliances or any other property from the home for his or her own personal use, he has committed conversion.
In general, real estate conversion can be avoided by carefully keeping all client accounts separate from personal or corporate accounts, and always using the funds in client accounts for their stated purpose.
Consequences of Committing Real Estate Conversion
The consequences for committing conversion or commingling can be severe and life-altering. Both offenses are ethical and legal violations of the trust shared between a real estate agent and their client. Committing conversion or commingling can constitute grounds for the revocation of your realtors permit at the very least.
In many jurisdictions, commingling and conversion also bear heavy legal penalties ranging from large fines to jail time. With this in mind, it is crucial to avoid committing either of these infractions at all costs.
Popular Real Estate Terms
Are you planning on buying a house? If you are, you’re going to love the Buyer's Market definition. But if you are a home seller, you will wish that term never comes up again in your ...
Process of the borrower giving the lender security to obtain the loan. ...
Statutes stipulating that the property of deceased individuals is distributed in a way that assumes that property during marriage is jointly owned and equally shared by the spouses ...
An interim or provisional court decree, which is not final and can be reversed or amended, normally issued to direct additional proceedings prior to issuing a final decree. For example, an ...
Classification of one's ownership rights in land. One way either buy the land and own all rights to it or lease it where one's rights are described in and limited by the lease agreement. ...
Time interval between buying a real estate investment and selling it. A sound way to determine the return from a real estate investment is over its life. For example, if land was bought on ...
Expenditures incurred to initially purchase property, including incidental costs necessary to put the property into existing use and location. This cost is then depreciated over the assets ...
Also called the Rule of the Sum of the Digits. An approach that bank use to formulate a loan amortization schedule. It results in a borrower paying more interest in the beginning of a ...
Document evidencing the passage of title to a purchaser of property sold for taxes. The tax deed is issued upon foreclosure of the property lien. Typically, there is a grace time period ...
Comments for Conversion In Real Estate
Who in the state, should be contacted if a condo HOA committed Conversion & Commingling?
Oct 18, 2020 16:47:06Hey Sharon,
The most reasonable thing to do if there is a complaint against an HOA is to address the issue with the companies management. That way, you can give them a chance to fix the problem. If the problem persists, some states have an agency that collects complaints and investigate them, or you could file a lawsuit against the management company if the claim is valid and legal.
Oct 23, 2020 10:10:39What's the difference between 'conversion' and 'commingling'?
Jun 10, 2019 23:12:52Hello, Jack! First of all, you have to know that both are illegal. When we speak about conversion in real estate, we say that a real estate agent or broker used his clients' money to cover his expenses. He/She changed the destination of the funds. When a real estate agent is accused of commingling of funds, it means that he/she didn't keep client's money into a separate account, but mixed his/her own funds with earnest money, for example. We hope you find this answer useful. Please continue to explore our glossary for more definitions of real estate terms.
Jun 11, 2019 09:43:32Have a question or comment?
We're here to help.