Florida Real Estate Broker Exam — All Questions
3 questions
When a Florida broker receives conflicting demands over an escrow deposit, Chapter 475 requires the broker to first:
- a.Release the funds to the seller
- b.Keep the funds as a fee
- c.Notify FREC in writing within the required time and then institute one of the settlement procedures within the required time✓
- d.Ignore the dispute until a lawsuit is filed
Florida law requires a broker facing conflicting demands (or good-faith doubt about who is entitled to escrowed funds) to notify FREC in writing within 15 business days and then, within 30 business days of the last written demand, institute one of the authorized settlement procedures. The recognized options are mediation, arbitration, an escrow disbursement order (EDO) from FREC, or interpleader/litigation. Unilaterally releasing disputed funds is a violation.
Which of these is an authorized escrow-dispute settlement procedure a Florida broker may use?
- a.Flipping a coin
- b.Requesting an Escrow Disbursement Order (EDO) from FREC✓
- c.Keeping the money after 90 days
- d.Letting the sales associate decide
Florida recognizes four settlement procedures for disputed escrow: mediation, arbitration, an Escrow Disbursement Order (EDO) issued by FREC, and interpleader or litigation. The EDO is a determination by the Commission of who is entitled to the funds. A broker who follows FREC's EDO in good faith is protected from liability. Arbitrary or self-interested handling of the money is prohibited.
A Florida broker who deposits escrow money into the brokerage's operating account instead of a separate escrow account has committed:
- a.A permissible shortcut
- b.An appraisal violation
- c.A zoning violation
- d.Commingling, which is prohibited under Chapter 475✓
Placing client escrow funds in the brokerage's own operating or personal account is commingling, which Florida prohibits. Escrow money must be placed in a separate escrow/trust account with a title company, attorney, or bank, generally by the end of the third business day after the sales associate receives it. Commingling and conversion are among the most serious escrow violations FREC pursues.