What illegal activity involves a Virginia real estate licensee mixing earnest money with their own funds?

The activity described in the question is referred to as commingling. In Virginia real estate law, commingling occurs when a licensee mixes clients’ funds, such as earnest money deposits, with their personal or business funds. This practice is illegal because it can lead to a misappropriation of funds and creates confusion regarding the ownership of the money. Licensees are required to keep clients' funds in separate accounts to ensure clarity and accountability.

Understanding the importance of this regulation helps protect clients and maintain the integrity of transactions in real estate. By avoiding commingling, licensees uphold their fiduciary duty and comply with legal standards that govern financial practices in the real estate industry.