Trust fund deposit requirements

Trust accounts. A trust account, also known as an escrow 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 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.

Sales associate trust 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.

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

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. 

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 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 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

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.

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

 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.