News & Information: Orando REALTOR® magazine - Case Study

Deductive Reasoning

Friday, August 29, 2014  
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Orlando REALTOR® | September/October 2014

A property manager cannot simply deduct what an owner owes in fees
from a tenant security deposit

The Department of Business and Professional Regulation (DBPR) brought a complaint against a licensed real estate broker for failing to deliver a tenant’s security deposit to the property owner. The alleged facts of the complaint are:

*The broker entered into a property management agreement with the property owner to manage the owner’s property.

*The broker located a tenant for the property, and the tenant signed a leasing agreement.

*The broker held the tenant’s security deposit.

Ultimately, the property owner notified the broker that he wished to terminate the management agreement. The broker terminated the management agreement and turned over the tenant’s security deposit. However, prior to turning over the tenant’s security deposit the broker deducted money owed to him by the property owner including an early termination fee, advertising costs, lockbox placement, and property showing fee from the tenant’s security deposit.

Counsel for the broker filed a motion asking the Florida Real Estate Commission to dismiss the case. The broker’s attorney argued in part that forcing the broker to transfer the tenant’s entire security deposit over to the property owner would result in the broker being forced to sue the property owner for any money owed to the broker.

The Florida Real Estate Commission denied the broker’s motion stating in part that a broker cannot take any of a tenant’s security deposit in order to deduct fees owed to the broker. The broker and the DBPR agreed to a settlement. The settlement required the broker to pay a $1,000 fine and $305.58 in costs, to complete the four-hour escrow management course, and to attend two two-day Florida Real Estate Commission meetings all within six months of the final order.

Source: Florida Department of Business and Professional Regulation

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