A broker received a birthday check from a client.

Comprehensive and Detailed Explanation (150–250 words):

Escrow accounts are trust accounts designated for client funds related to real estate transactions (e.g., earnest money, security deposits, rent held on behalf of others). Depositing non-transactional personal funds into escrow — such as a birthday gift check — is prohibited because it mixes personal/non-transaction funds with client trust funds. This is called commingling.

Conversion (A) occurs when escrow funds are used improperly for personal benefit.

C and D are incorrect because escrow is never for gifts or unrelated funds, regardless of account type or timeline.

Massachusetts regulations (254 CMR 3.10) explicitly prohibit commingling of personal funds with escrow accounts. Even if the check is from a client, if it’s unrelated to a transaction, depositing it in escrow is a violation.

Correct answer: B.