GOLD COAST REAL ESTATE REVISION TEST UPDATED
QUESTIONS AND ANSWERS GRADED A+
✔✔Escrow Funds - ✔✔Funds held by a third party on behalf of two parties in a
transaction
In real estate transactions, the real estate broker may act as the third party escrow
service, or funds may be held by another escrow service such as a title company.
Must be Maintained separately from the brokers business and personal funds
The misuse, commingling, or intermingling of, or failure to account for funds or property
entrusted to any licensee is a form of fraud.
✔✔Escrow account - ✔✔Must be held in a title company,banking institution, credit
union, or savings and loan association that is located and doing business in Florida.
A broker is authorized to place and maintain up to 1,000 of personal or business funds
in a sales escrow account,
And
Up to 5,000 of personal or business funds in a property management escrow account
for the purpose of opening the account, keeping the account open, and paying for
ordinary service charges.
Broker is ultimately responsible for funds in escrow account and must be a signatory on
all such accounts
✔✔Conversion - ✔✔Broker cannot or will not produce money or property belonging to
another when required, failure to account would occur.
If a broker failed to disburse another brokers or sales associate commission due.
✔✔Earnest Money Deposit - ✔✔Shows good faith on the part of the buyer usually
accompanies an offer, if no contract results, the deposit is returned to the buyer.
The deposit protects the seller in the event the buyer later defaults.
Default by buyer requires the deposit to be forfeited; compensates the seller for having
to remove the property from the market ( liquidated damages)
* posted dated check are considered earnest money and can be accepted with the
sellers approval
When deposits are placed or to be placed with a title company or attorney,
The licensee who prepared or presented the sales contract shall indicate on the
contract the
Name, address, and telephone number of the title company or attorney with whom the
deposit was placed. Within 10 business days after each deposit is due under the sales
contract, the licensees broker shall make a written request to the title company or
attorney to provide written verification of receipt of the deposits.
,✔✔Depositing Escrow Fund - ✔✔A sales or broker associate who receives a earnest
money deposit on behalf of his or her employer must deliver the deposit to the employer
no later than the end of the next business day following receipt
Broker must "immediately"( no later than the end of the third business day) place the
earnest money deposit in an escrow or trust account following receipt
If in form of securities, the conversion to cash should be made at the earliest practical
with the proceeds immediately placed into the escrow account.
Broker who receives deposit must keep an accurate account of each escrow deposit
transaction
✔✔Record Keeping - ✔✔Brokers books and records must be preserved for a minimum
5 yrs from the date escrow funds were received.
If record was subject of evidence in litigation- at least 2yrs after conclusion of litigation
Broker is ultimately responsible for funds in escrow account and must be a signatory on
all such accounts
✔✔Escrow Agent - ✔✔Broker is escrow agent for both parties
Until a binding contract has been entered into, the funds remain the property of the
buyer.
Broker has no rights to the escrow funds until contract ( signed by both parties). At that
point the deposited funds are under joint control of both parties but the broker must
continue to hold the funds.
If buyer defaults contract, seller would be entitled to deposit, and broker entitled to a
commission when the transaction closes
✔✔Escrow disputes - ✔✔Under the control of buyer and seller.
Broker holds funds.
Conflicting demands for escrowed funds or if broker has good faith doubt as to which
person is entitled to the escrowed property,
Broker must give written notification to the commission within 15 business days from the
date of the last party's demands
Also required to institute a authorized settlement procedure to resolve the dispute within
30 Days.
✔✔MEAL: four dispute settlement procedures are: - ✔✔Mediation- third party to assist
reaching an agreement
Has no power to impose decision on parties
Must be completed within 90 days of last demand, or broker must employ next
Arbitration-
Parties agree in advance by contract to abide by the arbitrators decision.
After hearing, with both parties heard, the arbitrator decides how the funds should be
disbursed and issues an award
, Award is binding and can be enforced in a civil law suit if the responsible party fails to
abide by the decision
Litigation- 2 methods avail
Broker files bill of interpleader if he or she does not claim any rights to the deposit under
dispute.
Escrowed funds would be turned over to the registry of the court, pending a settlement.
The broker may be awarded court costs and attorneys fees since the broker is making
no claim for any of the funds in dispute.
Declaratory decree- requested if broker feels that he or she is entitled to some or all of
the deposit in dispute
ESCROW DISBURSEMENT ORDER- commission issues an order, the broker by law
must follow it or be in violation of the law. The parties are advised of the decision by the
commission. If they disagree, they may file an appeal with the district court.
Should the appeal be upheld, the broker could be subject to civil damages for
disbursing the funds, even though they were legally required by the escrow
disbursement order to do so.
If the dispute is subsequently settled or goes to court before the order is issued, the
broker must notify the commission within 10 business days of such event
✔✔Escrow Disbursement Exemptions - ✔✔When a sales contract is subject to
financing, and the broker is acting as an escrow agent, the broker may refund the
deposit to the buyer without notification to the commission if the financing cannot be
obtained.
✔✔Non resident licensee - ✔✔Any resident who becomes non resident must notify the
commission of the change in residency within 60 days and comply with non residential
standards
✔✔Sole Proprietor Broker - ✔✔Can register and operate as a real estate broker if her or
she has a current active and valid brokers license
✔✔General Partnership - ✔✔"Partnership"
Business formation in which two or more people agree to share the profits or losses of
a business.
Agreement Can be expressed, implied, orally, or in writing
No documents need to be filed with the state to create a partnership
✔✔Real Estate Brokerage Partnership - ✔✔Must have at least one partner licensed as
an active broker.
Anyone who provides real estate services to the public, directly or indirectly must have
brokers license
Sales or brokers associate CANNOT be in this partnership.
QUESTIONS AND ANSWERS GRADED A+
✔✔Escrow Funds - ✔✔Funds held by a third party on behalf of two parties in a
transaction
In real estate transactions, the real estate broker may act as the third party escrow
service, or funds may be held by another escrow service such as a title company.
Must be Maintained separately from the brokers business and personal funds
The misuse, commingling, or intermingling of, or failure to account for funds or property
entrusted to any licensee is a form of fraud.
✔✔Escrow account - ✔✔Must be held in a title company,banking institution, credit
union, or savings and loan association that is located and doing business in Florida.
A broker is authorized to place and maintain up to 1,000 of personal or business funds
in a sales escrow account,
And
Up to 5,000 of personal or business funds in a property management escrow account
for the purpose of opening the account, keeping the account open, and paying for
ordinary service charges.
Broker is ultimately responsible for funds in escrow account and must be a signatory on
all such accounts
✔✔Conversion - ✔✔Broker cannot or will not produce money or property belonging to
another when required, failure to account would occur.
If a broker failed to disburse another brokers or sales associate commission due.
✔✔Earnest Money Deposit - ✔✔Shows good faith on the part of the buyer usually
accompanies an offer, if no contract results, the deposit is returned to the buyer.
The deposit protects the seller in the event the buyer later defaults.
Default by buyer requires the deposit to be forfeited; compensates the seller for having
to remove the property from the market ( liquidated damages)
* posted dated check are considered earnest money and can be accepted with the
sellers approval
When deposits are placed or to be placed with a title company or attorney,
The licensee who prepared or presented the sales contract shall indicate on the
contract the
Name, address, and telephone number of the title company or attorney with whom the
deposit was placed. Within 10 business days after each deposit is due under the sales
contract, the licensees broker shall make a written request to the title company or
attorney to provide written verification of receipt of the deposits.
,✔✔Depositing Escrow Fund - ✔✔A sales or broker associate who receives a earnest
money deposit on behalf of his or her employer must deliver the deposit to the employer
no later than the end of the next business day following receipt
Broker must "immediately"( no later than the end of the third business day) place the
earnest money deposit in an escrow or trust account following receipt
If in form of securities, the conversion to cash should be made at the earliest practical
with the proceeds immediately placed into the escrow account.
Broker who receives deposit must keep an accurate account of each escrow deposit
transaction
✔✔Record Keeping - ✔✔Brokers books and records must be preserved for a minimum
5 yrs from the date escrow funds were received.
If record was subject of evidence in litigation- at least 2yrs after conclusion of litigation
Broker is ultimately responsible for funds in escrow account and must be a signatory on
all such accounts
✔✔Escrow Agent - ✔✔Broker is escrow agent for both parties
Until a binding contract has been entered into, the funds remain the property of the
buyer.
Broker has no rights to the escrow funds until contract ( signed by both parties). At that
point the deposited funds are under joint control of both parties but the broker must
continue to hold the funds.
If buyer defaults contract, seller would be entitled to deposit, and broker entitled to a
commission when the transaction closes
✔✔Escrow disputes - ✔✔Under the control of buyer and seller.
Broker holds funds.
Conflicting demands for escrowed funds or if broker has good faith doubt as to which
person is entitled to the escrowed property,
Broker must give written notification to the commission within 15 business days from the
date of the last party's demands
Also required to institute a authorized settlement procedure to resolve the dispute within
30 Days.
✔✔MEAL: four dispute settlement procedures are: - ✔✔Mediation- third party to assist
reaching an agreement
Has no power to impose decision on parties
Must be completed within 90 days of last demand, or broker must employ next
Arbitration-
Parties agree in advance by contract to abide by the arbitrators decision.
After hearing, with both parties heard, the arbitrator decides how the funds should be
disbursed and issues an award
, Award is binding and can be enforced in a civil law suit if the responsible party fails to
abide by the decision
Litigation- 2 methods avail
Broker files bill of interpleader if he or she does not claim any rights to the deposit under
dispute.
Escrowed funds would be turned over to the registry of the court, pending a settlement.
The broker may be awarded court costs and attorneys fees since the broker is making
no claim for any of the funds in dispute.
Declaratory decree- requested if broker feels that he or she is entitled to some or all of
the deposit in dispute
ESCROW DISBURSEMENT ORDER- commission issues an order, the broker by law
must follow it or be in violation of the law. The parties are advised of the decision by the
commission. If they disagree, they may file an appeal with the district court.
Should the appeal be upheld, the broker could be subject to civil damages for
disbursing the funds, even though they were legally required by the escrow
disbursement order to do so.
If the dispute is subsequently settled or goes to court before the order is issued, the
broker must notify the commission within 10 business days of such event
✔✔Escrow Disbursement Exemptions - ✔✔When a sales contract is subject to
financing, and the broker is acting as an escrow agent, the broker may refund the
deposit to the buyer without notification to the commission if the financing cannot be
obtained.
✔✔Non resident licensee - ✔✔Any resident who becomes non resident must notify the
commission of the change in residency within 60 days and comply with non residential
standards
✔✔Sole Proprietor Broker - ✔✔Can register and operate as a real estate broker if her or
she has a current active and valid brokers license
✔✔General Partnership - ✔✔"Partnership"
Business formation in which two or more people agree to share the profits or losses of
a business.
Agreement Can be expressed, implied, orally, or in writing
No documents need to be filed with the state to create a partnership
✔✔Real Estate Brokerage Partnership - ✔✔Must have at least one partner licensed as
an active broker.
Anyone who provides real estate services to the public, directly or indirectly must have
brokers license
Sales or brokers associate CANNOT be in this partnership.
