Final Answer:
Commingling occurs when escrow funds, such as earnest money, are mixed with personal funds.
Step-by-step explanation:
Commingling is a term used in the context of handling funds, particularly in real estate transactions. Earnest money, which is a deposit made by a buyer to demonstrate their commitment to a real estate transaction, is typically held in an escrow account. Commingling happens when these funds are combined with an individual's personal funds, violating the principle of keeping client or transaction funds separate from personal finances. This practice is not only ethically questionable but may also be against legal regulations, as it can lead to complications, mismanagement, or misuse of funds. Real estate professionals, including agents and brokers, are expected to maintain strict separation between client funds and personal finances to ensure transparency and trust in the transaction process.