At All Costs
Friday, August 31, 2012
Limit your liability by doing whatever it takes to follow the money and the rules of escrow
Orlando REALTOR® | September/October 2012
By Sarita Cabrera
Mishandling of escrow funds is among the top causes of investigation by the Florida Real Estate Commission (FREC), as evidenced by recent meeting minutes. When customers give a personal check or cashiers check to their sales associate, they are entrusting them with their hard earned money. Properly following the money throughout a transaction will not only decrease the chances of liability, but also step up the level of professionalism savvy consumers expect today from their REALTORS®.
»Be aware of your duties when escrow funds are entrusted to you
The Florida Administrative Code requires licensees who prepare or present an offer to provide the name, address, and telephone number of the escrow agent. Inserting "TBD” or leaving the section blank will not protect the parties, agents, or brokers involved.
»Turn in escrow on time
One of the most common escrow violations involves sales associates who fail to give a check received from buyers to the escrow holder within the one business day time period required under real estate license law.
»Document all escrow changes
If the buyer and seller agree that the escrow should be moved to another escrow holder, it should be documented in the contract through an addendum. Never photocopy an escrow check and return to it your buyer. Sales associates should coach their buyers that escrow must be deposited promptly. If the offer is not accepted, it can be transferred to another property or returned to the buyer.
»Never use the same photocopy of an escrow check for multiple offers
»Follow up when additional escrows are due
Another common escrow problem occurs when the contract requires a second escrow deposit to be deposited, but the sales associate fails to follow up with the buyer to ensure that it’s paid and then fails to inform the seller that the broker hasn’t received the deposit pursuant to the contract.
»Mark all important contract dates on a calendar
When sales associates are blessed with multiple transactions, marking all important escrow and term dates on either an electronic or print calendar will help them stay on top of deadlines.
By following these tips, sales associates can raise the bar on their professionalism and show their customers and peers that they truly care about the funds entrusted to them and that the transaction closes seamlessly.
Sarita Cabrera, Prudential Florida Realty, is a member of the ORRA Risk Management Committee. She can be reached at firstname.lastname@example.org.