CH 4 - Florida Broker Real Estate: Escrow Management and Trust Account Procedures and Laws

Vocabulary practice flashcards covering Florida real estate escrow management, trust accounts, deposit timelines, dispute resolution procedures, and relevant state statutes.

Escrow account

Also known as a trust account; an account in a bank, savings and loan association, trust company, credit union, or title company having trust powers, separate from the broker's operating funds, used to hold other people’s money.

Commingling

The illegal act of mixing a broker's personal or operating funds with escrow funds, with the exception of up to $1,000$ in a sales escrow account or $5,000$ in a rental account.

Conversion

The act of taking money from an escrow account to use for personal reasons; it is considered theft and a violation of trust.

Immediately (Sales Associate)

The timeframe by which a sales associate must deliver an escrow deposit to the broker, defined as no later than the end of the next business day.

Immediately (Broker)

The timeframe by which a broker must deposit funds into an escrow account, defined as no later than the end of the third business day following receipt.

Trust liability

The sum total of all deposits received, pending, and being held by the broker at any point in time.

Conflicting demands

A situation where a broker receives demands for the same escrowed funds from both the buyer and the seller.

Good faith doubt

An instance where the broker honestly doubts which party should receive the escrowed money.

Mediation

A voluntary, non-binding settlement procedure involving a trained neutral party; if the issue is not resolved within $90$ days, the licensee must use another action.

Arbitration

A settlement procedure where a neutral third party (arbitrator) makes a final, binding decision regarding the distribution of disputed escrow funds.

Litigation

A court-ordered settlement procedure that involve an interpleader or a declaratory judgment to determine the rightful owner of escrow funds.

Interpleader

A legal action where the escrow holder, having no claim to the funds, deposits them with the court to allow claimants to litigate for the money.

Escrow Disbursement Order (EDO)

A procedure where the broker requests the Florida Real Estate Commission (FREC) to decide who is entitled to the disputed escrow funds.

Boot

An accounting term referring to cash or other property added to an exchange to make the value of the traded goods equal.

M-A-L-E

A mnemonic used to remember the four settlement procedures for escrow disputes: Mediation, Arbitration, Litigation, and Escrow Disbursement Order.

Declaratory judgement

A binding determination of the rights of parties as determined by the court's interpretation of a purchase and sale contract.

Reconciliation Statement

A monthly written statement comparing the broker's total trust liabilities with the reconciled bank balances of all trust accounts.

Surety bond

An option for landlords to hold security deposits by posting a bond with the clerk of the circuit court for the total amount of deposits or $50,000$, whichever is less.

Chapter 83 Florida Statute

The Landlord Tenant Act, Part II, which specifies the requirements for holding and disclosing deposit money or advance rent.

Right of Rescission (New Condo)

A period of $15$ days during which a buyer of a new condominium or cooperative unit may cancel the contract without penalty.

Right of Rescission (Resale)

A period of $3$ business days during which a buyer may cancel a contract after receiving required documents for a resale condominium, cooperative, or Homeowners’ Association property.

Timeshare cancellation period

A period of $10$ days during which any timeshare purchaser may cancel their sale.

Rental information refund (not found)

The requirement for a broker to refund $75\%$ of the fee if a tenant does not find a rental within $30$ days.

Rental information refund (inaccurate)

The requirement for a broker to refund $100\%$ of the fee if the rental information list provided was not current or was inaccurate.