A Florida real estate broker is managing a trust account for earnest money deposits. The broker receives a $10,000 earnest money deposit. The broker also has a separate property management trust account. To cover minor bank charges on the earnest money trust account, the broker places $100 of their own funds into the account. Is this permissible, and why?
- AYes, because the amount is minimal and intended to cover bank charges, preventing the account from falling below zero.
- BNo, because the broker should use the property management trust account to cover such charges instead.
- CYes, but only if the broker immediately notifies the Florida Real Estate Commission (FREC) of the deposit.
- DNo, this is an example of commingling, which is strictly prohibited, regardless of the amount or intent.
Show answer & explanationAnswer & explanation
Correct answer: A. Yes, because the amount is minimal and intended to cover bank charges, preventing the account from falling below zero.
While commingling (mixing broker's personal funds with trust funds) is generally prohibited, Florida law (F.S. 475.25(1)(d)1) makes a specific exception for placing up to $1,000 of a broker's personal funds into a sales escrow account (or $5,000 into a property management escrow account) specifically to cover bank charges and maintain the account. This is not considered commingling in this context.
Why the other options are wrong
- B. Using the property management trust account for sales escrow charges would be incorrect and could lead to other commingling issues.
- C. Notification to FREC is not required for this specific exception.
- D. This is generally true for commingling, but there's a specific legal exception for minimal amounts to cover bank fees in Florida.
Broker Personal Funds in Escrow
Florida law permits a broker to place a limited amount of personal funds (up to $1,000 for sales escrow, $5,000 for property management escrow) into a trust account to cover bank service charges and maintain the account, which is an exception to commingling.
- Exception to commingling rule.
- Max $1,000 for sales escrow.
- Max $5,000 for property management escrow.
- Sole purpose: cover bank charges/maintain account.
Memory trick: Small 'buffer' cash is okay, but don't 'mix' big bucks.