Florida Real Estate Sales Associate Examination Content OutlineReal Estate Brokerage Activities and ProceduresHard
A real estate broker is involved in an earnest money dispute between a buyer and a seller. Both parties claim the deposit, and the broker cannot resolve the conflict through mediation. Which of the following is NOT an authorized settlement procedure available to the broker under Florida law?
- AReturning the funds to the party who initially deposited them, after giving notice to both parties.
- BFiling a suit in the Florida courts, also known as an interpleader.
- CSubmitting the dispute to arbitration, with written consent of both parties.
- DRequesting an Escrow Disbursement Order (EDO) from FREC.
Show answer & explanationAnswer & explanation
Correct answer: A. Returning the funds to the party who initially deposited them, after giving notice to both parties.
A broker cannot unilaterally decide to return the funds to one party in a dispute, even with notice. This would be a breach of fiduciary duty and could lead to liability. The authorized procedures (EDO, arbitration, interpleader, or mediation) require a neutral third party or legal process to resolve the claim.
Why the other options are wrong
- B. An interpleader action asks a court to decide the rightful claimant and absolves the broker of liability.
- C. Arbitration is a valid alternative dispute resolution method if both parties agree.
- D. An EDO is a formal request for FREC to determine who is entitled to the disputed funds.
Escrow Dispute Procedures
Florida law outlines specific procedures a broker must follow to resolve conflicting demands for escrowed funds.
- Must notify FREC within 15 business days of conflicting demands.
- Four authorized settlement procedures: EDO, mediation, arbitration, interpleader.
- Broker cannot unilaterally disburse disputed funds.
Memory trick: Disputed Funds: 'M'aybe 'A'rbitrate, 'I'nterplead, or get an 'E'DO.