Be thankful for state licensing laws
Tomorrow is Thanksgiving and we all have special things to be thankful for. One thing that every resident of the state of Florida is certainly thankful for is the quiet and basically non-existent hurricane season we just exited from, but when it comes to real estate there’s always more.
All states in the United States have their own set of licensing rules regarding the sale of real estate. The Florida Statutes are very clear as to client broker relationships especially when it comes to the handling of funds. Believe it or not this may not be a sexy topic but it is one that is important and one that we should all be thankful for.
When you walk into a real estate sales office have you ever thought about exactly who the actors are and what are their relationships to you as a buyer, seller or renter of real estate? In the state of Florida there are very tough education and testing requirements that must be met before an individual can get a license to sell, list or rent properties.
The definition of a broker is a licensed person who for another and for compensation or with the intent to receive compensation acts as an agent for others in the performance of one or more services of real estate.
In Florida there is separate education and testing to become a broker or a sales associate. A sales associate can perform any act specified in the definition of “broker” but they perform such acts under the direct control or management of another and can only be employed by one broker. You can also obtain a broker associate designation which means that you have completed the education and testing requirements to become a broker giving you the ability to form your own real estate firm, however, you have chosen to perform these duties under the direction, control or management of another person.
All brokers and sales associates are mandated to perform fairly, honestly and use skill, care and diligence in their business relationships. In addition, they are required to present all offers and counteroffers in a timely manner unless directed otherwise in writing by the buyer or seller.
Just to further confuse the public, Florida and other states have established transaction brokers and single agent brokers. Transaction brokers may represent both the buyer and seller in the same transaction and have limited representation and fiduciary capacity. A single agent exclusively represents either the buyer or the seller in a transaction and owes full fiduciary and confidentiality to that person. Under Florida licensing law it is presumed that all licensees are operating as transaction brokers unless otherwise stated.
Another very important issue that is also controlled by Florida licensing laws is the handling and disposition of escrow funds. Down payments collected as part of a fully executed contract of sale must be deposited within three business days into a designated escrow account. This account can be held by an attorney, a title company or a real estate brokerage escrow account. Brokers who maintain brokerage accounts are required to prepare a monthly reconciliation.
Real estate licensing laws are specific and highly regulated in order to protect consumers. They’re not perfect but nevertheless we should all be thankful for the protection they provide. Unfortunately, we recently had a rental agent on Anna Maria who managed to defraud several unsuspecting renters. He was eventually caught but this incident serves as a reminder to all potential buyers and renters to be exceedingly careful who you do business with.
One thing we should all be thankful for is the beautiful area we’re privileged to live in; wishing you and your family a peaceful Thanksgiving.