Do you know where your buyers deposits are
Do
You Know Where Your Buyers' Deposits Are? Ethics, Standards of Practice
and The Law.
There
is the Realtor® Code of Ethics and Standards of
Practise and then there is state law.
The difference between the two is that while the law seeks only to
protect the consumers the Realtor® Code of Ethics and Standards
of
Practice goes above that and extends to the ways in which
Realtors®
treat each other.
In
the state of Florida there are thousands of people who have real estate
licenses.
Every person in the state of Florida that sells real estate ( there are
exceptions) must be licensed by the state of Florida to do so. In fact,
recently it became a FELONY to sell real estate without a license. Not
every real estate licensee is a member of the National
Association of Realtors® or the state and local boards of
Realtors®. A real estate agent who is not a member of NAR is
not
subject to the Code of Ethics and Standards of Practise set forth by
the National Association of Realtors®.
The
second biggest reason that real estate agents in Florida lose their
licenses is over deposits or earnest money deposits. The
first reason is for misrepresentation. 
A
true story ( the names have been changed to protect the innocent):
Diane
wrote a contract
for her buyer. He gave her a deposit of $10,000 at 3 p.m. in
CASH. She was very nervous with all that cash and so she
rushed
to her office to give it to her broker. When she arrived she discovered
that her broker had gone home for the day and she was not able to reach
him. She was so scared of either losing the money or someone stealing
the money that she rushed over to her bank and deposited the money for
safekeeping into her personal bank account. FREC somehow found out
about this and she lost her license for putting the cash into her bank
account. This is illegal to do in the state of Florida.
The
state of Florida is very serious about deposit issues.
If you have a check made out to your real estate company it must be out
of your hands and into the hands of your broker as fast as you can but
no later than the next business day.
When
must funds be deposited in an escrow account?
Deposits
of escrow monies should be immediately deposited upon receipt by the
licensee. 'Immediately' generally means the placement of a deposit in
an escrow account no later than the end of the third business day
following receipt of the item to be deposited. Saturdays, Sundays and
legal holidays shall not be considered as business days. A deposit
received on Monday must be deposited no later than the end of the
following Thursday. ( this is from FREC)
NAR Standards of Practice Article 2-4 states:
" Realtors® shall not be parties to the naming of a false
consideration in any document, unless it be the naming of an obviously
nominal consideration."
When
you accept earnest money from a buyer you need to know where this money
comes from and it is really there.
Never sign for a deposit that is not there. This is the # 1 biggest
mistake that I see agents make in our area. I get these offers all the
time from buyer's agents with deposit amounts written into the contract
but no deposit taken.
We
insist that if a buyer is not placing an actual deposit at the time of
the offer that the words,
"within 3 business days of the acceptance of this offer funds shall be
placed in named Title company at this address with this phone number
and this contact person". In fact the new FAR BAR contracts have a
space to add the title company information. I am not an attorney and I
am not giving any legal advice.
Let
us examine this scam that takes place in the state of Florida with
deposits:
Mr and
Mrs Smith go house hunting.
They arrive in Naples Florida and find out who the newest agent to have
joined the board there is. Her name is Miss Rooky. Mr Smith calls Miss
Rooky up at her office and says they would like to see one of the
listings that her office has listed. She is so excited. This is going
to be her first showing and the house is listed at 3.2 million dollars!
WOW! Miss Rooky meets Mr and Mrs Smith and shows them this
listing. The Smiths say they are in love with the house and tell Miss
Rooky to write up an offer. They want the house.
Upon
arrival back at the real estate office Miss Rooky can hardly contain
herself. The
Smiths are going to make a full offer! When it comes time to fill in
the blanks, Miss Rooky asks how much of a deposit will they be putting
down. Mr Smith says, $100,000. They finish filling out the contract,
the Smiths sign the contract. Miss Rooky signs the contract and fills
in her company information, then she makes a copy of the contract and
as she hands it over to the buyers she asks them for their check so she
can make a copy of the check and turn it into her broker. Mr Smith
smiles and looks over to Mrs Smith and says, " Honey, write the check
please" at which point Mrs Smith gets an OH OH look on her face. She
exclaims, " Oh NO! Where is my check book." Mr Smith then says, " Dear,
don't tell me you forgot your check book at the hotel!" Mrs Smith says
in an emarrassed tone that she did leave the check book in the room at
their hotel. Mr Smith then goes on to tell Miss Roocky that they are SO
sorry that they do not have their checkbook but that they will go back
to the hotel and get it and bring it by first thing in the morning.
Miss Roocky is so excited about the offer that she just says that this
will be fine and she will see them in the morning at her office.
The
next morning Miss Roocky is so excited and was hardly able to sleep the
night before.
She rushes in to the office. However, before she arrives at her office
Mr and Mrs Smith walk into the broker's office and say that they have
changed their minds about the offer they made the night before with
Miss Roocky and they want their deposit returned. Miss Roocky arrives
on the scene to see the couple in her broker's office. When she walks
into the office she hears them tell her broker that this money was in
cash. $100,000 in cash they said that they had left with their agent!
Now
this Mr and Mrs Smith can travel from city to city in Florida
performing this scam.
And they can get away with it based on the numbers of agents who accept
deposits without proof of funds, without checks and without signatures
of acceptance from Title companies. I see agents take offers stating
deposits that are not there all the time!
Safe
Tips For Deposits:
- Do not ever write an offer stating that you have
received a deposit when you have not.
- Before writing an offer confirm the source of
the deposit.
- If the buyer is getting funds from a 401K; it
will be at least 2 weeks before they will have those funds in their
possession.
- We have decided that our brokerage will not hold
escrow deposits. All deposits go to a title company, a third party.
- Make sure the title company signs that they have
accepted a deposit from your buyer or from you.
- Make sure you email or fax the listing agent a
copy with who signed for these funds.
- Know the laws in your state regarding monetary
and other considerations.
Safeguard your license.
Katerina Gasset, CIPS, Realtor
®, Business and Life Coach, Speaker and Author. Reach Katerina
at: 561-753-0135
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Copyright © 2008 By Katerina Gasset, All Rights Reserved.*Do You Know Where Your Buyers'
Deposits are?Ethics- Standards of Practice and the Law.*
Contact Katerina Gasset for Customized
Business and Personal Coaching.
;)
;)
VERY GOOD ADVICE.
Our laws are quite different but just as severe and escrow is one of the top two reasons for agents getting in trouble.
I do hold earnest money deposits for buyers, but I'm a control freak.
I would never take a cash deposit.