What is the term used when a managing broker has funds incorrectly placed between their escrow and business accounts?

The correct choice is the term "commingling." This term describes the situation where a managing broker mixes client funds held in escrow with their own business or personal funds. It's a serious violation because funds in escrow are meant to be kept separate and secure for the benefit of clients, ensuring that the money is available for its intended purpose, such as closing costs or earnest money in a real estate transaction.

In real estate practice, maintaining strict boundaries between client funds and personal or operational funds is crucial for legal compliance and ethical practices. Commingling can lead to loss of trust, legal consequences, and potential financial complications, as it indicates a failure to adhere to the fiduciary responsibilities that real estate professionals owe to their clients. This definition is essential to understand for anyone working within the framework of real estate regulations in Indiana.