What action constitutes conversion in the context of escrow funds?

In the context of escrow funds, conversion refers to the unauthorized use or misappropriation of those funds. The action that constitutes conversion is typically related to the handling of the escrow account in a manner that is not authorized or fails to meet the legal obligations of the parties involved.

Withdrawing funds without authorization is a direct misappropriation of funds, which constitutes conversion. Thus, this would be a scenario where a real estate agent or escrow officer unlawfully takes or uses funds that belong to another party. This action is illegal and breaches fiduciary duties.

Failing to disburse funds when required can also lead to conversion issues, as it may indicate that the party holding the funds is not adhering to the agreed-upon terms of the escrow agreement. In such a case, the funds are being held improperly, and a claim of conversion could arise if the necessary disbursement should have taken place and did not occur.

Mixing personal funds with escrow funds creates significant legal risks and can lead to claims of conversion. While it highlights mismanagement of funds, it does not directly correspond to the legal act of conversion as stated in this question context.

Failing to account for received funds may suggest mismanagement or negligence rather than a direct act of conversion.