GUIDELINES FOR ADVERTISING AND HANDLING DEPOSITS

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Guidelines For Advertising

Prohibitions / Wording of advertisements / Internet advertising

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Prohibitions

False or misleading advertising. Florida law prohibits licensees from placing or causing to be placed any advertisement for property or services that is fraudulent, false, deceptive, misleading, or exaggerated. This includes written ads as well as ads on television or radio that are used to induce the sale, purchase, or rental of real property.

Penalties. False, deceptive, fraudulent, or misleading advertising can result in administrative fines and license suspension.

Blind advertising. Florida law requires that all advertisements include the brokerage’s licensed name so any reasonable person would know the ad is from a real estate licensee. The broker’s nickname may be included in the advertising as long as his or her legal registered name is also included. The broker’s personal name may also be included in the ad as long as the broker’s last name as it is registered with the DBPR is included. Ads that do not include the brokerage’s name are considered blind advertising and are prohibited.

Sales associates advertising or conducting business in own name. Brokerage services include advertising. Consequently, anyone placing advertisements must be a broker. Sales associates may create or place advertisements only under the supervision and in the name of their employing broker. Sales associates may not advertise in their own names. Any form of advertising created by a sales associate must include the brokerage’s licensed name.

Team advertising.  Teams within a brokerage firm may advertise only under the supervision of the broker and in the name of the brokerage firm. Certain words, namely “brokerage,” “realty,” and the like, are not allowed as potentially creating confusion for the public. The name of the team must be in a font that is no larger than that used for the name or logo of the registered broker.

Wording of advertisements

In addition to including the brokerage’s name, real estate advertisements must be worded so that any reasonable person knows that the advertiser is a real estate licensee. They may not be worded in a way that makes the public believe the ad is from someone other than a real estate licensee.

Internet advertising

Just as with any other form of advertising, the brokerage’s name must appear within an internet advertisement. Florida administrative rule requires the name to be placed adjacent to, immediately above, or immediately below the point of contact information. Again, this prevents blind advertising and any related penalties.

Point of contact information. Information on how to contact the brokerage firm or the individual licensee is referred to as “point of contact information.” Such contact information includes mailing address, physical street address, e-mail address, telephone number, and facsimile (fax) telephone number.

Telephone solicitation laws         

Telephone Consumer Protection Act. The TCPA (Telephone Consumer Protection Act) addresses the regulation of unsolicited telemarketing phone calls. Rules include the following:

• Telephone solicitors are banned from using an artificial or a pre-recorded voice to a residential line without prior express consent.
• Robocalls (prerecorded calls) from telemarketers or debt collectors without prior express consumer consent are banned.
• Solicitors are banned from using a fax or computer to fax unsolicited advertisements.
• Solicitors are banned from using an auto dialer to send text messages to cell phones without prior express consumer consent.
• Calls after 9 p.m. and before 8 a.m. in the consumer’s time zone are banned.

• telephone solicitors must identify themselves, on whose behalf they are calling, and how they can be contacted
• telemarketers must comply with any do-not-call request made during the solicitation call
• consumers can place their home and wireless phone numbers on a national Do-Not-Call list which is maintained by the Federal Trade Commission and which prohibits future solicitations from telemarketers.
• Information on the national registry can be found online at https://www.consumer.ftc.gov/articles/0108-national-do-not-call-registry or https://www.donotcall.gov/.
• Robocalls must provide an automated opt-out function during the call.
• Consumers may sue companies that violate the law on a per-call basis.

Exemptions from the Act.

• Debt collection calls with express consent (not written) and without any advertisements.
• Calls from nonprofit organizations, political organizations, and healthcare organizations.
• Certain exigent circumstances calls, such as fraud or cyber breach warnings.
• Federal debt collectors up to three times per month.
• A real estate licensee who has an actual buyer for an advertised “for sale by owner” property only to negotiate a sale.
• A real estate licensee with an established business relationship with a customer even if the customer’s number is on the national do not call list.
• A real estate licensee who has accepted a business inquiry or application from a customer within the last 3 months.

CAN-SPAM Act. The CAN-SPAM Act (Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003) supplements the Telephone Consumer Protection Act (TCPA) by covering solicitations through email.

• bans sending unwanted email ‘commercial messages’ to wireless devices
• requires express prior authorization
• requires giving an ‘opt out’ choice to terminate the sender’s messages

Junk Fax Prevention Act. Both the Junk Fax Prevention Act and the Federal Communications Commission (FCC) cover the use of faxing as a means for solicitations. Faxing unsolicited advertisements to residential or business fax machines is prohibited unless the consumer’s prior express consent. Both solicited and unsolicited faxes must include the following:

• the date and time the fax was sent
• the sending company’s registered name
• the sending company’s telephone number or the sending fax machine’s telephone number
• an opt-out option on unsolicited faxes

Florida telemarketing laws

Florida state telemarketing laws apply to businesses located within Florida and those outside the state who call Florida residents. The laws include the Florida Telemarketing Act and the Florida Telephonic Sales law. They are administered by the Florida Department of Agriculture and Consumer Affairs (FDACS) and the Attorney General who investigate and assess penalties against violators. Penalties for violations are based on each call. The laws include the following:

• Telephone solicitors must obtain a license from the Florida Division of Consumer Services before operating in Florida.
• Solicitors must restrict their calls to 8 a.m. to 9 p.m.
• Solicitors may not block caller ID.
• Solicitors may not accept only credit card payments.
• The solicitor has 30 seconds to state his or her true name, the name of the company the telemarketer represents, and the goods or services being sold.
• Solicitors must tell consumers about their right to cancel any agreement to purchase the goods or services being offered.

Florida has its own do not call list that prohibits telemarketers from calling residential phones, cell phones, or paging devices. The FDACS is required to merge all Florida listings within the national do-not-call list with the Florida do-not-call list. Additional information and the registry can be found online at https://www.fdacs.gov/Consumer-Resources/Florida-Do-Not-Call.

Exemptions from the Florida laws. The following are exempted from  Florida’s telemarketing laws in some cases:

• licensed insurance professionals
• nonprofit and religious organizations
• political organizations
• certain newspapers
• certain banks

Real estate licensees are also exempt when they are calling a property seller in response to a yard sign or other advertisement placed by the seller. However, a licensee is not exempt if the seller is a “for sale by owner” advertiser who has placed his or her telephone number on the national do-not-call list.

Brokers are required to develop written procedures for solicitation calling policies. They must obtain the do-not-call lists and train their employees and independent contractors on using and maintaining the lists. The lists should be reviewed periodically for new additions so the licensees can remove those additions from their own solicitation call lists. Reviewing the national list is critical since federal law does not exempt real estate licensees. If a number is on the national list, whether or not it is on the state list, real estate licensees must not call that number.

HANDLING DEPOSITS

Escrow account deposit requirements

Definition of escrow account. An escrow account, also known as a trust account, is an account in a bank, credit union, or savings and loan association within Florida that is established to hold funds until the time comes to disburse them for a particular purpose. The account is held by a third party to a transaction and holds money, such as earnest money from a property buyer, until the property ownership is transferred at closing. Title companies with trust powers and attorneys may also be used to hold funds in escrow.

Escrow accounts may be used to hold rental property deposits and rent payments; however, while not required, sales funds and rental funds should be kept in separate escrow accounts. The funds deposited into the escrow account include cash, checks, money orders, drafts, personal property, or item of value.

Florida law mandates that the account is to hold only third-party funds with no licensee personal funds intermingled. However, the law also allows the broker to deposit personal or brokerage funds into each escrow account to be used for account maintenance fees. Thus, the broker may deposit $1,000 into each sales escrow account and $5,000 into each property management escrow account.

Sales associate funds delivery requirements. If a property buyer gives earnest money or any other deposit to a sales associate in relation to a real estate transaction, the sales associate is required to turn the money over to his or her employing broker no later than the end of the next business day, not counting Saturdays, Sundays, or legal holidays. The same timing is required for rental deposits.

For example, Buyer Susan gives Sales Associate John an earnest money check on Monday morning. John must turn the check over to Broker Justin by the end of the day on Tuesday.  Let’s say that Tuesday is a legal holiday. That means John needs to turn the check over to Justin by the end of the day on Wednesday.

Definition of “immediately” for a broker. Florida administrative rules state that brokers who receive any form of funds from their sales associates related to a real estate transaction must immediately deposit those funds into an escrow account. The rule defines “immediately” as no later than the end of the third business day following receipt of the item to be deposited, with Saturdays, Sundays, and legal holidays not considered business days. The three business days begin when the sales associate receives the funds, not when the broker receives them from the sales associate.

Here’s how this works: If the funds are received on Monday, Tuesday is the first business day “following receipt of the item to be deposited.” Wednesday is the second business day following receipt of the deposit; and Thursday is the third business day, the end of which is the deadline for depositing the funds into the escrow account.

So, given the previous example, if associate John receives the earnest money check from Susan on Monday and turns it over to broker Justin on Tuesday, Justin must deposit the check into his escrow account no later than the end of the day on Thursday. If Tuesday is a holiday and John turns the check over to Justin on Wednesday, Justin has to deposit the funds into his escrow account by the end of the day on Friday.

Requirements if deposited with title company or attorney. Funds related to a real estate transaction may be deposited or placed in escrow with a title company or an attorney. When this happens, the name, address, and telephone number of the company or attorney must be noted on the sales contract by the licensee who prepared the contract. All deposit requirements for the broker’s escrow account also apply to deposits made with a title company or attorney.

When funds are due for deposit, the licensee’s broker has 10 business days to request in writing that the title company or attorney provide written verification that the funds were received and deposited. Then, within 10 business days of that request, the broker must provide the seller’s broker either a copy of the written verification that the funds were received and deposited or a written notice that the broker did not receive verification of the funds and deposit. This verification is not necessary if the title company or attorney was nominated in writing by the seller or the seller’s agent. If the seller is not represented by a broker, the buyer’s broker is to notify the seller directly.

If the funds have been placed in escrow with a title company or attorney, there is no Florida statute regulating those accounts. Consequently, the FREC will not step in to resolve any conflict over disbursement of the funds if the transaction does not close. To settle the dispute, the parties will need to rely on the appropriate court and bear the expense of doing so.

Management of  escrow accounts

Escrow account signatory. Florida administrative rules require the broker to be the signatory on all escrow accounts. If there is more than one broker licensee within the brokerage, then any one of those licensees may be the designated signatory.

Escrow account maintenance. The broker is responsible for reconciling the accounts each month and for ensuring the accounts comply with Florida laws. The broker also must make a monthly written statement that compares the broker’s total liability with the bank balances of all escrow accounts.

The statement needs to include the date the account reconciliation was completed, the date used to reconcile the balances, the name of the bank and the account, the account number, account balance and date, any deposits in transit, outstanding checks, and an itemized list of the broker’s trust liability.

The broker must keep records of all deposits, the source of the funds, and each account and provide those records and transaction-related agreements to the DBPR when requested. The records must be kept for at least 5 years.

Requirements for interest distribution.  The broker may hold escrow funds in an insured interest-bearing account in a banking facility located within Florida. All parties associated with the particular transaction must agree in writing to use an interest-bearing account. They must also agree to whom and when the interest will be disbursed.

Requirements for conflicting demands for escrow funds. When a real estate transaction does not close, the earnest money and any other related funds must be disbursed to the appropriate party. If the parties to the transaction do not agree on who should receive the funds and both parties make demands for the funds, the broker must notify the FREC of the conflict within 15 business days of the last demand received for the funds. The broker should use the Notice of Escrow Dispute/Good Faith Doubt form found online at

http://www.myfloridalicense.com/dbpr/re/documents/EDO_Notice.pdf.

The broker must also proceed with a settlement procedure (see below) within 30 business days after the last demand and notify the FREC of the procedure being used to resolve the conflict. The notification timing requirements for both the conflict and the settlement procedure start on the same day.

For example, if the broker received the last demand for escrow funds on June 1, the 15 business days for notifying the FREC of the conflict begins on June 1; and the 30 business days for notifying the FREC of the settlement procedure also starts on July 1.

Good-faith doubt procedure and situations. The term “good faith” is used to describe a sincere or honest motive without any malice or intent to defraud someone else. People enter into contracts, such as real estate sales contracts, with a presumption of good faith that the parties will be honest and fair and not negatively impact the other party’s right to benefit from the contract. When one party appears not to be behaving in good faith, the behavior creates doubt in that party’s good faith. If that doubt is sincere and honest, it is referred to as good-faith doubt.

If a broker has good-faith doubt as to who is entitled to the funds held in the broker’s escrow account, he or she should first look to the sales contract for the escrow instructions. If the contract does not clear up the doubt, the broker must notify the FREC within 15 business days after having such doubt, using the Notice of Escrow Dispute/Good Faith Doubt form. The broker may have a good-faith doubt based on any of many situations.

For example, one party indicates he does not plan to comply with the closing schedule and terms but does not provide the broker with instructions for disbursement of the trust funds or provides instructions that do not match those in the sales contract.

Another example would be that the transaction does close, and the parties provide different instructions for the disbursement of the funds.

Yet another situation leading to good-faith doubt for the broker would be if the transaction fails to close and one party does not respond to the broker’s request for disbursement instructions, thus requiring the broker to send notice to that party that the funds will be released to the other party if he or she does not respond by a given date.

Once the broker develops good-faith doubt, he or she must then proceed with a settlement procedure (see below) within 30 business days after having such doubt. The determination of good faith doubt is based upon the facts of each case brought before the FREC.

Settlement procedures. When the need arises to settle an escrow conflict or a good-faith doubt, the broker may use any of four settlement procedures:

• mediation – an informal conflict settlement procedure that is conducted by a qualified third party

  The intention is to bring the parties together and with the guidance of the mediator have the parties come to a mutually agreeable resolution. Mediation may be used to settle the conflict if all of the associated parties give written consent. Once an agreement is reached, it is put into writing and signed by both parties. It then becomes a binding contract.

  If the parties do not all consent to mediation or if the conflict is not settled in mediation within 90 days of the last demand, the broker must employ one of the other settlement procedures. All statements made during mediation are confidential and may not be used in any other proceeding.
  

• arbitration – a process conducted by one or more (usually three) third party arbitrators acting as judges

  Typically, each side chooses one arbitrator, and then those two select a third. The arbitrators hear evidence, make decisions, and give written opinions. The arbitrators’ decisions are binding. The conflicting parties must agree in writing to go to arbitration and must agree to comply with the arbitrators’ final decision.

• litigation – a legal procedure either party may use if parties do not agree to mediation or arbitration

  In this case, one party would file a lawsuit for the conflict to be heard in court to reach a resolution. However, because mediation is so successful and cost effective, Florida courts require most lawsuits to be mediated before a court will hear the case. Litigation can involve either of the following procedures:

• interpleader action – a means for the broker holding the escrow funds to be removed from the dispute over the disbursement of the funds

  The funds are placed in the court depository, and it is left up to the court to determine who is to receive the funds. This also removes the broker from any potential liability as a result of the final disbursement. Contracts often include provisions for the interpleader action costs to be paid with the escrow funds or for the loser of the case to pay the other party’s attorney fees.

• declaratory judgment – requested when the broker claims part of the escrow funds

  The broker would file for a declaratory relief or judgment to have the appropriate trial court decide each party’s rights to the escrow funds.

• Escrow Disbursement Order (EDO)– a determination made by the FREC as to who is entitled to the escrow funds

  If the funds are held by the broker, he or she can request the FREC issue an EDO. If the EDO is denied, then the broker must employ one of the other settlement procedures and notify the FREC of which procedure will be used. If the funds are held by an attorney or title company, the FREC will not issue an EDO.

  Even though the broker is employing one of the settlement procedures, either party may still choose to file a civil lawsuit to settle the matter. If the broker has requested an EDO but the parties settle the matter by another means before the EDO is issued, the broker must notify the FREC of the settlement within 10 business days.

If the broker follows the notice and settlement procedures under the required timeframes and follows the resulting order or judgment, no administrative complaint may be filed against the broker for failure to account for, deliver, or maintain the escrowed property.

Notice and settlement procedure exceptions. Not all situations regarding disbursement of escrow funds require the broker to give notice or employ any of the settlement procedures. Florida statute and administrative rule allow three specific exceptions:

• If the buyer of a residential condominium gives the broker a written sales contract cancellation notice in accordance with Florida Condominium law, the broker may release the escrowed funds to the buyer without notifying the FREC or employing any of the settlement procedures.
• If a real property good-faith buyer fails to meet the financing provisions within the sales contract, the broker may release the escrowed funds to the buyer without notifying the FREC or employing any of the settlement procedures.
• If a broker receives an earnest money deposit as a result of a Department of Housing and Urban Development (HUD) residential sales contract for the sale of a HUD-owned property, the broker is not required to follow the notice or settlement procedures. Rather, the broker must follow HUD’s Agreement to Abide, Broker Participation Requirements and the HUD Act of 1968 (24 C.F.R. s. 291.135) as they pertain to the proper disbursement of earnest money deposits.