Escrow or trust accounts (general)

Question 1

Brokers who hold money associated with leasing property in a trust must hold the funds in _______

Answer 1

an escrow account

Question 2

Are brokers required to keep earnest money separate from rental deposits?

Answer 2

No, it’s not a requirement; just a recommendation

Question 3

Do funds need to be kept in a non-interest-bearing or interest-bearing account?

Answer 3

Either one is allowed

Question 4

What is the requirement if a licensee wants to keep funds in an interest-bearing account?

Answer 4

The licensee must obtain the written permission of all interested parties and written authorization as to who is entitled to interest earned

Question 5

What are the three acceptable depositories for escrow?

Answer 5

• escrow account (interest-bearing or non-interest-bearing) in a Florida commercial bank, savings association, and credit union
• Florida-based title company with trust powers
• A Florida attorney, if designated in the sale contract

Question 6

How soon after receiving earnest money deposits and rental deposits does a sales associate need to deliver the money to their broker?

Answer 6

No later than the end of the next business day

Question 7

How soon must a broker place the deposits into an escrow account?

Answer 7

No later than the end of the third business day following receipt by the brokerage

(clock starts the day after the money was given to the brokerage)

Question 8

Who may receive rental deposits & earnest money deposits?

Answer 8

• sales associate
• broker
• broker associate
• receptionist

Question 9

Can a broker accept a postdated check? If so, how?

Answer 9

Yes, as long as the broker gets the seller’s approval

Question 10

Is the broker responsible for nonpayment of an escrow check?

Answer 10

No, as long as they deposited the check on time

nonpayment means the check did not clear, aka insufficient funds

Question 11

Do brokers have to be a signatory on the brokerage escrow accounts?

Answer 11

yes

Question 12

How often do brokers need to reconcile escrow accounts? What do they need to do?

Answer 12

• monthly
• review, sign, and date the monthly bank reconciliations

Question 13

Can a broker designate another person to sign checks on the account?

Answer 13

yes

Question 14

Can a broker use trust funds for their personal or business expenses?

Answer 14

no

Question 15

What is conversion?

Answer 15

• The unauthorized use of another person’s funds or property for one’s own use

So, for example you can’t use trust funds for personal or business expenses; even if you pay the money back

Question 16

What is commingling? What is the only exception?

Answer 16

• Brokers may not mix trust funds with other types of funds
• The only exception is funds to maintain the account

Instead, they should have a general business account from which they pay their taxes and maintenance costs

Question 17

What are two examples of ‘failure to account or deliver’?

Answer 17

• Licensee fails to deliver any personal property or funds belonging to a person entitled to receive it
• A broker fails to pay an earnest money deposit at title closing

Question 18

If a broker is holding the escrow account with an attorney or title-closing agent, how much time do they have to deliver the funds to the agent?

Answer 18

Same, three business days following the day the funds were received

Question 19

What must a broker indicate on the sales contract if they want to keep the funds with a title company or attorney?

Answer 19

They must indicate on the contract the title company’s name or attorney’s name, address, and phone number

Question 20

How are monies paid in advance handled?

Answer 20

• They should be placed into an escrow account until services are completed
• Once service is completed, the broker must transfer funds into the operating account

Question 21

What is the Timeshare Act?

Answer 21

The Timeshare Act prohibits a real estate licensee from collecting an advance fee for the listing of a time-share unit