Escrow Deposits & Brokerage Practice

What is a "deposit"?

Rule Fla. Admin. Code R. 61J2-14.008 defines a deposit as money or its equivalent delivered to a licensee as earnest money, a payment or a part payment in connection with a real estate transaction. It includes cash and checks, and any medium of exchange or securities to be converted into money. A broker isn't responsible for a check that bounces unless the broker, through culpable negligence, failed to deposit it in the regular course of business.

Where deposits go

A trust or escrow account must be in a bank or trust company, title company having trust powers, credit union, or savings and loan association within Florida. Personal funds may not be commingled, except as the rules allow.

"Immediately" means the end of the third business day

Under the rule, "immediately" means placing the deposit in the escrow account no later than the end of the third business day following receipt. Saturdays, Sundays and legal holidays aren't business days.

Deposits held by a title company or attorney

When a deposit is placed with a title company or attorney, the licensee who prepared or presented the contract must put that escrow agent's name, address and phone number on the contract. Within 10 business days after each deposit is due, the licensee's broker must request written verification of receipt (unless the escrow agent was nominated in writing by the seller or seller's agent). Within 10 business days after making that request, the broker must give the seller's broker either the verification or written notice that none was received.

Conflicting demands: the escape procedures

If a broker has good-faith doubt about who is entitled to escrowed funds, or receives conflicting demands, the broker must promptly notify the Commission and promptly use one of the escape procedures in § 475.25, Fla. Stat.(1)(d)1.:

1. Request an escrow disbursement order (EDO) from the Commission;
2. With the consent of all parties, submit the matter to arbitration;
3. Seek adjudication by a court (interpleader or otherwise); or
4. With the written consent of all parties, submit the matter to mediation, which must be completed within 90 days after the last demand.

A broker who promptly uses an escape procedure and abides by the result is protected from an administrative complaint for failing to account for or deliver the escrowed property.

Advertising and brokerage practice

Brokerage activities and procedures make up 12% of the exam. Beyond escrow, expect questions on office and sign requirements, advertising, and the broker's responsibility for associates. Review Chapter 61J2, F.A.C., for the details.