This is a short summary of what the Real Estate Recovery Fund (“RF”) is and how it works. It is not an exact restatement of the law.
Any specific questions concerning eligibility or discussion of a specific claim should be directed to a licensed Florida attorney.
The Real Estate Recovery Fund is an account created by the Florida Real Estate Commission (“FREC”) to reimburse any person, partnership, or corporation convicted by a court of competent civil jurisdiction in this state to have suffered monetary damages by reason of any act committed, as a part of any real estate brokerage transaction involving real property in this state, by any broker or sales associate.
Florida Statutes 475.482 contains the rules and regulations relating to how the Recovery Fund is funded, who is eligible to collect from the recovery fund and how disbursements can be made.
How is the Florida Real Estate Recovery Fund Funded?
The RF is funded by a fee of $3.50 added to the license fee of new broker license applications and renewal of broker’s licenses, as well as a fee of $1.50 added to the license fee of new sales associate license applications and renewal of sales associate licenses. In addition, all money collected from fines imposed and collected by the FREC are transferred to the Florida Real Estate Recovery Fund.
Who Can Collect From The Recovery Fund?
Any person or business entity may collect from Florida’s Real Estate Recovery Fund, providing that the broker’s or sales associate’s license was active during the time that the claiming party was harmed.
What Does This Mean for Brokers?
It is important to know about the process if a brokerage intends to hold escrow because the RF protects the broker if the broker receives an escrow disbursement order issued by the FREC. A brokerage should make sure they take the requisite steps when dealing with an escrow claim so that they can preserve their right to claim on the RF.
Be aware that the process of claiming on the RF is a legal one. A person must have a license to practice law to assist a third party in the filing of a claim. If a customer believes that they have been damaged by the actions of another licensee in Florida, the licensee should recommend they speak with an attorney concerning their claim.
How Does The Florida Real Estate Recovery Fund Work?
The purpose of establishing the Florida Real Estate Recovery Fund is to protect “consumer-members” or the general public. In the event that a member of the public is harmed financially by a real estate licensee violating Florida Statute 475, the member of the public can request compensation from the RF if they meet certain requirements.
First, the licensee would need to have a judgment brought against them in court. If the injured party was awarded damages and could not collect the judgment from the licensee, they could then claim from the RF.
The time period is also an important factor when an injured party makes a claim to the Real Estate Recovery Fund. The party has 2 years from the time the violation occurred or 2 years from when the violation was discovered. If the violation is over four years, no claim can be made.
Can A Broker Claim From The Florida Real Estate Recovery Fund?
Yes. However, there are circumstances where a broker would not be permitted to make a claim from the RF. Florida Statutes Section 475.483 (2)(a) states that a person cannot make a claim if they are a licensed broker or sales associate who was acting as a transaction broker or single agent in the transaction that was the subject of the RF claim.
When Can a Broker Claim From The Florida Real Estate Recovery Fund?
Suppose a licensee was financially harmed through the actions of another licensee. In that case, the injured party could file a claim from the RF, although the main purpose of establishing the Real Estate Recovery Fund is to protect the public.
What Is The Maximum Amount That The Florida Real Estate Recovery Fund Will Award?
The maximum amount that can be claimed from Florida’s Real Estate Recovery Fund is $50,000 per single transaction. An injured party can claim a maximum of $150,000 for multiple transactions; they can claim the unsatisfied portion of a judgment, whichever amount is less.
If a party is awarded a judgment against a licensee, the licensee’s assets would be used first to satisfy the judgment.
How Long Will A Licensee Be Suspended For If Funds Are Paid Out Against A License Holder?
Suspension of a license is a temporary penalty. The Real Estate Commission may suspend a license for a maximin of 10 years.
If payment is awarded to an injured party from the RF, the licensee will have their license immediately suspended. They must pay back the amount in full to the Recovery Fund, plus any interest due.
Once the licensee has paid back the amount in full, they may have their license reinstated. It is important to note that bankruptcy would not relieve a licensee from these rules ad regulations unless a decision had been made otherwise from the Commission.
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