Which practice is prohibited when managing client funds in real estate?

Managing client funds in real estate requires a high level of fiduciary responsibility and adherence to regulations. The correct choice highlights a fundamental rule in real estate transactions: client funds must not be misused for personal or business expenses. This is vital to maintain the trust and integrity that clients expect when they engage a real estate professional. Using client funds for any purpose other than those explicitly agreed upon, such as paying for closing costs or deposits related to a transaction, is prohibited and could lead to legal penalties or loss of licensure.

The other options, which include depositing funds in trust accounts, keeping records of transactions, and providing timely receipts, are practices that are not only permissible but also essential for proper management of client funds. Depositing client funds into a designated trust account ensures that the funds are safeguarded and properly accounted for. Keeping accurate records of all transactions is crucial for transparency and accountability, and providing timely receipts is important for client clarity and satisfaction. These practices help facilitate smooth operations and uphold ethical standards in real estate transactions.