Broker
Chapter 4
Escrow Management
Copyright Gold Coast Schools
1
Learning Objectives
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Define the term escrow account
Define the terms commingle and conversion
Describe the requirements for establishing an
escrow account(s)
Describe the requirements for timely deposit of
escrow funds
Describe the procedure for handling postdated
checks
Copyright Gold Coast Schools
2
Learning Objectives
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Describe the requirements for maintaining an
interest-bearing escrow account
Describe the procedure for disbursing funds from
an interest-bearing escrow account
Describe the requirements for maintaining
escrow records
Define the term trust liability
Calculate the broker's trust liability
Copyright Gold Coast Schools
3
Learning Objectives
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Calculate the reconciled bank balance
Prepare a monthly reconciliation statement
Distinguish among the four settlement
procedures
Recognize exceptions to the FREC's
notification and settlement requirements
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4
Establishing Escrow Accounts
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Established for the deposit of money a
third party holds in trust for others
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At least one active broker must be a signatory on
an escrow account
A designated unlicensed employee may also be a
signatory on an escrow account
Holding of escrow
–
–
Any federally insured institution located in Florida
If designated in a purchase and sale agreement
escrow funds may be held by a Florida title
company or a Florida attorney
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5
Establishing Escrow Accounts
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Commingling
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Illegal practice of mixing the broker’s personal
funds with the escrow funds.
–
Exception to open and maintain the account
 $ 1,000 for sales escrow accounts
 $ 5,000 for property management escrow
accounts
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6
Title Companies and Attorney Escrow Accounts
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Escrow Accounts are not required for a
broker
May use Title Company or Attorney Escrow
 475
has no jurisdiction (EDO)
 Timely deposit of fund is in effect
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7
Escrow (Trust) Deposits
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Deposits must be placed in escrow account
immediately defined as
Check to
Broker
Day
Deposit
Received
Day not
counted

Check in
Escrow
1 Business Day
3 Business Days
Day 1
Day 2
Day 3
Post dated checks or promissory notes require
Seller’s Consent before accepting
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Immediately (Example)
Sun.
Mon. Tues. Wed. Thurs
$
1st Bus.
Day
Buyer
gives
check
to
Agent
Check
must be
given to
Broker
2nd
Bus.
Day
Fri.
Sat.
3rd
Bus.
Day
Check
must be
in
Escrow
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9
Establishing Escrow Accounts
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Receipt of a postdated check or
promissory note as an earnest
money deposit must be
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Disclosed to all parties immediately
Noted on the purchase and sale contract
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10
Interest-bearing Escrow Accounts
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All parties to the transaction must give
written consent
Designate the party to receive the interest
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When it is to be disbursed
Brokers designated to receive interest
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Must transfer the interest to their operating account
Monthly
Failure to stop interest from accruing
–
May result in a notice of noncompliance
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11
Monies Paid in Advance
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Commissions paid in advance should be
deposited into escrow account
May be released when earned
Time-Share Act prohibits a licensee from
collecting an advance fee for listing a
time share
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12
Broker’s Records
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The broker must maintain any
relevant records
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For at least 5 years or
2 years after the conclusion of all litigation
including appellate proceedings
Whichever is later
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13
Monthly Reconciliation Statement
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Trust liability is other people’s money
being held by the broker at any point in
time
Trust liability should equal the reconciled
bank balance
Determining reconciled bank balance
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Bank statement balance
Less outstanding checks
Plus deposits in transit
Equals reconciled bank balance
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Broker’s Records
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Conversion - the unauthorized use of
another person’s property.
Broker is not responsible paying a
check or draft unless:
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Unpaid due to broker’s negligence
and
Party was damaged
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15
Escrow Disbursement Dispute Process
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Conflicting demands occur
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When a broker receives dissimilar instructions
from buyer and seller
Which cannot be resolved
Good faith doubt
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A party’s faithfulness to their duty or
obligations as set forth in a contract or
A broker has indications that a party to the
transaction is not acting in good faith
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16
Escrow Disbursement Dispute Process
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The first step in the dispute resolution
process is to notify FREC in writing
within 15 business days

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Of the party’s last demand or
After having good faith doubt as to a party’s
honest intentions
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Escrow Disbursement Dispute Process
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Second step
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Select one of the dispute resolutions
procedures
Notify FREC in writing within 30 days
–
–
Of receiving the last demand or
After having good faith doubt
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Dispute Resolution Procedures
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Mediation - negotiated settlement
Arbitration - binding determination
Litigation
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Interpleader
Declaratory judgment
Escrow disbursement order
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Contact FREC within 10 days if settled
before EDO complete
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Exceptions
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HUD owned properties
A buyer’s notice of intent to cancel a
contract on a purchase of a
residential condominium unit
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New unit (developer) – 15 days
Resale unit – 3 business days
If a buyer in good faith fails to satisfy
the terms specified in a financing
clause in a contract
Copyright Gold Coast Schools
20
Notification of Special Type of Properties
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Property Management Deposits and Rents
Condominium Unit Purchase
Unclaimed Escrow Funds
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21
Brokers Commissions
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Antitrust Laws
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Conspiracy
Splitting up Market Areas
Conspiring to Boycott
Requiring a minimum commission before
allowing listings to be circulated (MLS)
Liens on Real Property

With prior disclosure
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