Proper handling of escrow accounts is the #1 item on the State Exam and not without reason. Since you are all licensees, you are all required to be familiar with and abide by company policies and State law regarding escrow deposits and their handling.

Escrow deposits do not have to be made in cleared funds, however, all funds must clear prior to disbursal or settlement of the transaction.

Cleared Funds:

Cleared funds are:

• Broker’s trust account check from a cooperating broker
• Cashier’s check drawn on a Florida financial institution
• Cash
• USPS Money Orders
• Bank wire transfer after receipt has been acknowledged by our bank.

The following items are NOT cleared funds:

• Company checks
• Checks issued by banks through automatic or on-line payment programs (these look a bit like cashier’s checks but they are simply personal checks no matter how “official” looking the printing
• Cashier’s checks from out-of-state financial institutions

Any other funds are subject to collection prior to disbursal. In some cases, issuing banks will not verify payment of personal checks to our bank. Unless issuing bank will verify payment to our bank, personal checks are not treated as cleared until they have been in the bank for 10 business days.

If you are in doubt about whether an items has cleared prior to disbursal/settlement, stop what you are doing and check with Broker first. Remember: there are no real estate emergencies.

Closing/Settlement of a transaction CANNOT take place without cleared funds. This means keys/possession cannot be given until verified with the closing agent.

• Rentals- Agents are the “closing agent” so it is important to seek Broker’s advice when in doubt about the status of funds (see acceptable cleared funds above).
• Sales- The closing agent is the title company or attorney. Keys can only be released after approval or confirmation that closing is official.

Escrow: Key Points

There is a lot to be said about escrow and there are more pages to view on this topic. The key take-aways that will keep you out of trouble are:

• Always handle funds properly.
• Never allow possession until authorized by the closing agent (sale) or you have verified that all funds have cleared (rental) and you have all closing funds in your possession (due from a cooperating agent or tenant).
• When in doubt, ask your Broker. Don’t assume. Don’t allow yourself to be pressured by a cooperating agent or buyer/tenant (even if the moving van is onsite).