What kind of funds management issue can result in sanctions against a licensee?

Commingling funds is a serious issue in real estate funds management that can lead to sanctions against a licensee. This practice refers to the improper mixing of personal funds with client or trust funds, which is strictly prohibited. Real estate professionals are required to keep clients' money in a separate trust account specifically designated for that purpose.

The rationale behind this regulation is to ensure that client funds are protected and that the licensee cannot access or use these funds for personal reasons. Commingling can create confusion about the ownership of funds and put clients' money at risk, leading to a breach of fiduciary duty. Licensing authorities are vigilant about this issue because it undermines the integrity of the real estate profession and can result in severe penalties, including suspension or revocation of a license.

In contrast, the other options do not inherently carry the same level of risk or legal repercussions. For instance, exceeding funds in a trust account may indicate mismanagement but does not imply commingling. Holding more than one account can be allowed, provided they are properly managed and designated, and returning funds to clients is a standard practice when those funds are legitimately owed. Thus, commingling stands out as the primary concern that can lead to sanctions against a licensee