Contracts Escrow

Test your knowledge: Escrow

Question: I’m a sales associate, and customers frequently give me their deposit checks. How quickly do I need to get them to my broker?

Answer: Florida law states that you must deliver those checks to your broker or employer no later than the end of the next business day after you receive them. (Chapter 61J2 14.009, Florida Administrative Code)

Question: I’m a broker associate, and my buyer may make an offer on a residential single-family home by the end of the month, and the buyer wants the earnest money deposit held in my real estate brokerage company escrow account. However, the buyer recently handed over the physical check for the earnest money and asked me to hold the check (not deposit it) until he actually makes an offer. May I wait until the offer has been made to deposit the earnest money check?

Answer: No. Since the Florida Administrative Code 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,” the broker must comply with Rule 61J2-14.010(1), Florida Administrative Code, which requires the broker to immediately deposit the escrow funds in the escrow account.

“Immediately” is defined in Rule 61J2- 14.008(3), Florida Administrative Code, 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.”

Question: I’m a broker with a listing for a home that has a lawn and pool. The owner went overseas but gave me money to hire a lawn maintenance company and a pool cleaning service while he’s away. Should I put this money in my escrow account?

Answer: Yes. Whenever you receive funds in connection with a real estate transaction belonging to someone else, you must deposit and hold the money in an escrow account until you have proper authorization from the owner for release.

Question: May a real estate broker place an escrow deposit for the sale and purchase of real property into an interest-bearing escrow account?

Answer: Rule 61J2-14.014, Florida Administrative Code, allows a broker to place escrow funds in an interest-bearing account, but only with the written permission of the parties to the sale and purchase transaction.

The written permission must specify which party receives the interest and the time when the earned interest must be disbursed. Additionally, the funds must be maintained in an insured depository (i.e., Florida banking institution) located within the state of Florida.

Question: May the seller and buyer agree that the seller will hold the buyer’s earnest money deposit?

Answer: Yes. The escrow holder is negotiable between the parties.

Question: I’m a broker of a new brokerage firm, and the firm’s owner isn’t a real estate licensee. Must I, as the broker, be a signatory on the firm’s operating account?

Answer: No. Rule 61J2-14.010(1), Florida Administrative Code, provides that at least one broker must be a signatory on all escrow accounts – but FREC does not regulate operating accounts.

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