Illinois Real Estate Practice Exam

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What is the term for stealing entrusted funds, often related to mishandling of client money by a real estate professional?

Conversion
Embezzlement
Fraud
Forgery

The correct answer is: Conversion

The correct term for stealing entrusted funds, particularly in the context of real estate professionals mishandling client money, is embezzlement. Embezzlement refers specifically to the act of wrongfully taking or misappropriating funds that have been entrusted to someone, such as real estate agents who manage client funds. Conversion, while related, typically involves taking someone else's property for one's own use without permission, and it does not necessarily imply that the person had been entrusted with those funds. Fraud involves deceitful practices to secure unfair or unlawful gain, which does not specifically focus on the mishandling of entrusted funds. Forgery refers to the act of falsifying documents to deceive another party, which is different in nature from the misspending of entrusted money. Understanding these definitions clarifies why embezzlement is the most accurate term for this specific situation involving the misappropriation of entrusted client funds in real estate.