Escrow deposits held by the broker: timing, accounts, and records

Florida broker-held escrow

A deposit includes money, checks, drafts, and other qualifying items of value, including securities intended for conversion. The broker must use an insured escrow or trust account at an eligible Florida depository and be a signatory. A multi-broker entity may designate one broker licensee as signatory.

Two deadlines, one receipt date

The sales associate must deliver a deposit to the broker or employer by the end of the next business day following receipt. The broker must deposit it immediately, defined in Florida as by the end of the third business day following receipt. Receipt by any brokerage representative counts as receipt by the broker; delivery to the broker does not restart the clock. Exclude Saturdays, Sundays, and legal holidays.

These deadlines are outside limits. Securities intended for conversion must be converted at the earliest practical time and the proceeds immediately deposited.

Accounts and records

Personal funds generally stay separate. Florida permits up to $1,000 per sales escrow account and $5,000 per property management escrow account in personal or brokerage funds. The property management allowance does not enlarge the sales account allowance.

Preserve deposit slips, depository statements, and transaction agreements. Keep accurate accounts of each deposit transaction and each bank account, available for departmental inspection at reasonable times during regular business hours.

Each month, prepare a written reconciliation comparing total trust liability with reconciled bank balances. Trust liability includes deposits received, pending, and held. Include account identification, relevant dates and balances, deposits in transit, outstanding checks, and itemized liabilities. The broker must review, sign, and date it. Explain differences, returned-check fees, and negative balances, and record corrective action. A bank statement alone is insufficient.

Interest-bearing escrow

Obtain all parties' written permission for placement, the interest recipient, and disbursement timing. Normally, transfer principal and interest to non-interest-bearing escrow before disbursement. If all parties designate the broker to receive interest, transfer principal to non-interest-bearing escrow and interest directly to the operating account. Alternatively, close an individual interest-bearing account for a specific transaction or sum on the agreed date, issuing checks to the appropriate recipients.

These broker-held deposit deadlines differ from verification procedures when a title company or attorney holds the deposit. Identify the holder first.