A real estate broker in Florida is managing multiple properties for various owners. To ensure proper accounting and compliance with license law, the broker maintains a separate operating account for the brokerage business and a separate trust account for all client funds. Which of the following is an acceptable practice regarding the broker's own funds in the trust account?
- AThe broker can deposit personal funds into the trust account to cover operating expenses of the brokerage.
- BThe broker is strictly prohibited from placing any of their own funds into any client trust account, under any circumstances.
- CThe broker can keep up to $5,000 of their own funds in the sales escrow account for the purpose of covering service charges and maintaining minimum balances.
- DThe broker can keep up to $1,000 of their own funds in the sales escrow account for the purpose of covering service charges and maintaining minimum balances.
Show answer & explanationAnswer & explanation
Correct answer: D. The broker can keep up to $1,000 of their own funds in the sales escrow account for the purpose of covering service charges and maintaining minimum balances.
Florida law permits a broker to place up to $1,000 of their personal funds into a sales escrow account, or up to $5,000 into a property management escrow account, specifically to cover service charges and maintain minimum balances. This is an exception to the general rule against commingling.
Why the other options are wrong
- A. Using trust account funds for operating expenses is a serious violation (conversion).
- B. This statement is generally true but incorrect due to the specific allowance for nominal amounts to avoid service charges.
- C. While $5,000 is allowed for property management escrow accounts, for general sales escrow accounts, the limit is $1,000.
Broker Escrow Account Funds (FL)
Florida law allows a broker to place a limited amount of their own funds into an escrow account (up to $1,000 for sales, $5,000 for property management) to cover service charges and maintain minimum balances, as an exception to commingling rules.
- $1,000 limit for sales escrow.
- $5,000 limit for property management escrow.
- Sole purpose: cover service charges/minimum balances.
- Any excess is considered commingling.
Memory trick: Don't mix your cash with client's stash, unless it's just for the bank's own dash!