Q: A broker chooses not to have an escrow account. What are the rules for depositing escrow?
A: Under Chapter 61J2-14.010,Florida Administrative Code, and Section 475.25(1)(k), Florida Statutes, the rules are the same whether or not the broker personally has an escrow account. If a broker has received funds, or any item of value, from any person interested in a real estate transaction, the money or item of value must be placed immediately into a bank, credit union, title company or into any insured escrow or trust account. Immediately is defined as placement of a deposit in a trust account no later than the end of the third business day following receipt of the item to be deposited. Weekend days and holidays are not considered to be business days. Receipt by a sales associate or any other representative of the brokerage constitutes receipt by the broker for this purpose.
Q: A sales associate frequently gets deposit checks from clients. How quickly does he need to get them to their broker?
A: No later than the end of the next business day after you received them.
Q: A broker is performing the monthly reconciliation statement for her real estate brokerage's escrow account. Is there a legally required form that must be used?
A: No. However, Rule 61J2-14.012(2), Florida Administrative Code, outlines the specific information that the monthly reconciliation statement must contain:
• The date the reconciliation was undertaken;
• The date used to reconcile the balances;
• The name(s) of the bank(s);
• The name(s) of the account(s);
• The account number(s), account balance(s) and the date(s);
• Deposits in transit;
• Outstanding checks identified by date and check number;
• An itemized list of the broker's trust liability; and
• Any other items necessary to reconcile the bank account balance with the balance per the broker's checkbook and other trust account books and records disclosing the date of receipt and the source of the funds.
The broker is required to review, sign and date the monthly reconciliation statement.
To provide help in preparing the monthly reconciliation statement, Florida Realtors provides its members with forms they may use: "Monthly Reconciliation Statement Real Estate Trust Account" (MSR-5) and "Monthly Reconciliation Statement Real Estate Trust Account Addendum" (MSRA-1). These forms are available through the Form Simplicity document management system.
Q: A seller walked away from a purchase and sale contract three days before closing. A buyer presented a release and cancellation, but the seller refused to sign, claiming entitlement to the deposit, which was being held by a local title company. Who notifies the Florida Real Estate Commission of the escrow dispute?
A: In this instance, no one would be notifying FREC. Section 61J2-10.032(1)(a), Florida Administrative Code, requires a real estate broker to notify FREC within 15 business days after receiving conflicting demands on trust funds maintained in the broker's account, but this provision does not apply to title companies.
In most cases, a title company will require clear written instructions from both parties before releasing the deposit. If the parties can't provide matching instructions within a reasonable period, the title company will likely deposit the funds with the local clerk of courts, and either party may then file a court case to argue why they believe they're entitled to the deposit.
Q: A broker associate has a buyer who may make an offer on a residential single-family home by the end of the month. The buyer wants the earnest money deposit to be held in the real estate brokerage company escrow account. Although the buyer has recently handed over the physical check for the earnest money, he asked the associate to hold the check (not deposit it) until he actually makes an offer on the property. May the associate wait until the offer has been made to deposit the earnest money check?
A: No. Rule 61J2-14.009, Florida Administrative Code (FAC), provides that any associate or broker associate must deliver the escrow deposit "to the broker or employer no later than the end of the next business day following receipt of the item to be deposited." Then, the broker must comply with Rule 61J2-14.010(1), FAC, which requires the broker to immediately deposit the escrow funds in the escrow account. Immediately is defined in Rule 61J2- 14.008(3), FAC, as "…the placement of a deposit in an escrow account no later than the end of the third business day following receipt of the item to be deposited. Saturdays, Sundays and legal holidays shall not be considered as business days."
Q: A new broker and would like to start his own real estate brokerage and have a title company maintain all the escrow funds. Is a real estate brokerage company required to have an escrow account?
A: No. There is no legal requirement for a real estate brokerage company to have an escrow account if the brokerage is not maintaining any escrow funds.
Q: If a broker is providing property management services to a landlord, does the broker have to hold the security deposit or advanced rents in escrow?
A: No. Pursuant to Sections 83.49(1)(a) and (b), Florida Statutes, the landlord has the responsibility to hold the security deposit and advanced rents in a non-interest-bearing or interest-bearing account in a Florida banking institution. The broker doesn't have to hold this money unless the broker and landlord agree that the broker will do so, pursuant to a Property Management Agreement. Further, the escrow agent, the holder of the security deposits and advanced rents, should be designated in the lease between the landlord and the tenant.
Q: A seller demands that his attorney be the escrow agent. May the seller make such a demand?
A: Like any other contract term or condition, the choice of an escrow agent is a negotiable item between the parties.
Q: May the seller and buyer agree that the seller will hold the buyer's earnest money deposit?
A: Yes. The escrow holder is negotiable between the parties.
Q: A broker wants to provide property management services to a landlord. Must she have an escrow account?
A: No. She's not legally required to have an escrow account. The landlord may hold the advanced rent and the security deposit (Section 83.49, Florida Statutes).
Q: I'm a broker opens her own real estate office and sets up her escrow accounts. How much of her own money may she keep in my escrow accounts?
A: A broker may place and maintain up to $5,000 of personal or broker funds in the broker's property management escrow account and up to $1,000 of personal or brokerage funds in the broker's sales escrow account. Federal law
Q: What kinds of transactions are covered under the Real Estate Settlement Procedures Act (RESPA)?
A: Transactions that are covered are those involving a federally related mortgage loan, which includes most loans secured by a lien (first or subordinate position) on residential property. These include home purchase loans, refinances, lender-approved assumptions, property improvement loans, equity lines of credit and reverse mortgages.
Q: What types of transactions are generally not covered under RESPA?
A: The following are not covered: an all-cash sale, a sale where the individual home seller takes back the mortgage, a rental property transaction or other business purpose transaction.
Q: What is FIRPTA?
A: FIRPTA is an acronym for the Foreign Investment in Real Property Tax Act. This tax is imposed on the amount realized from the sale of real property owned by a foreign seller. There are exceptions to this tax-withholding requirement. Given the complexities of tax laws, the buyer and seller should consult with a tax specialist to determine the exact withholding amount or to determine if an exemption to the FIRPTA requirement applies.
Q: May a mortgage banker and a real estate broker advertise their services together, for example, on the same brochure or newspaper advertisement?
A: Nothing in RESPA prevents joint advertising. However, each party should pay pro rata share of the cost to avoid a RESPA violation.
Q: Does FIRPTA apply to a foreign buyer?
A: No. FIRPTA applies when the seller is a foreign person, as defined by FIRPTA.
Q: I'm a broker who specializes in the sale of businesses and business opportunities. I want to call businesses in my area to see if they're interested in selling. Do the federal Do Not Call laws or regulations apply to businesses?
A: No. The Do Not Call Registry is only for residential telephone numbers.
Q: I know that RESPA requires a lender, as well as mortgage brokers in some instances, to provide a "Good Faith Estimate" to all applicants for a federally related mortgage loan. Do the charges appearing on the Good Faith Estimate have to be exact?
A: No. Under RESPA, the Good Faith Estimate must include the amount of or range of charges for settlement services the borrower is likely to incur in connection with the settlement. Each estimate must be made in good faith and bear a reasonable relationship to the charge a borrower is likely to be required to pay at or before settlement.
Q: Does the federal do-not-call legislation apply to door-to-door solicitations?
A: No. However, you may still be prohibited from making door-to-door solicitations if there is a community, municipal or county restriction on door-to-door solicitations or if there is a posted No Trespassing sign on the property or the community.
Q: I'm a real estate licensee, and I'd like to place a "For Sale by Owner" sign in my front yard to attract potential buyers and other real estate licensees. I'm not actually planning to sell my house; I just want to market my real estate services to anyone who sees my FSBO sign and calls me. Is this allowed?
A: No. Enticing potential buyers and other real estate licensees to call about your house, which you have no intention of selling, in an attempt to market your services is a violation of Article 12 of the Realtor® Code of Ethics, promulgated by the National Association of Realtors and adopted by the Florida Association of Realtors. Article 12 advises, in part, "Realtors shall be careful at all times to present a true picture in their advertising and representations to the public." Check with your local Board or visit here for a copy of the Realtor Code of Ethics.
From a licensing law perspective, Section 475.25(1)(c), Florida Statutes, warns that licensees must not "advertise any property or services in a manner which is fraudulent, false, deceptive, or misleading in form or content," and Rule 61J2-10.025, Florida Administrative Code, echoes this point. The Florida Real Estate Commission (FREC) may also be able to assert that this type of activity is dishonest dealing under Section 475.25(1)(b).