Escrow Account Management
Brokers in Florida have strict responsibilities for managing escrow accounts, including monthly reconciliation and proper handling of trust funds.
Escrow accounts hold funds belonging to clients or customers and are subject to stringent regulations. Brokers are entrusted with safeguarding these funds and must reconcile the escrow account monthly to ensure that the balance matches the records. This reconciliation process helps prevent errors, fraud, and mismanagement of client funds. Failure to properly manage escrow accounts can result in disciplinary action by FREC.
A broker receives an earnest money deposit of $5,000 from a buyer. This money must be deposited into the broker's escrow account. The broker must then reconcile the account monthly to ensure the $5,000 is accounted for and not commingled with their own funds.
Focus on the key responsibilities: monthly reconciliation and proper handling of trust funds. Understand that escrow accounts are for client funds only, and brokers must never commingle these funds with their own.
Related Terms
Practice Questions
Related Concepts
Florida real estate licenses must be renewed biennially, and sales associates have specific post-license education requirements for their first renewal.
Florida brokers are required to maintain transaction records and escrow records for a minimum of five years.
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
Commingling is the illegal act of mixing client trust funds with a broker's personal or business operating funds; conversion is the misappropriation of those funds.