I’m sitting in the FREC meeting listening to EDOs. What do all those acronyms mean? More importantly, what do we need to know for the Florida real estate exam?
So let’s say that Buyer Black gives a $5,000 deposit to Real Estate Agent Ron. Ron gives it to his broker by the end of the next business day. The broker deposits it in the bank by the end of the third business day. So far, so good.
Seller Sam accepts the offer. They are closing in two weeks.
Well, something happens between now and closing and the deal goes south. Buyer Black says, “Give me my deposit back.”
Seller Sam says, “You don’t get the deposit. I get the deposit.”
Real Estate Agent Ron is stuck in the middle with the $5,000. He has to give it to somebody but he’s not sure who. This is call conflicting demands. In this case, the first thing you should do is notify FREC within 15 days that we have a conflicting demand problem.
After that, you have to implement one of the four escape procedures or settlement procedures within 30 days. The four procedures are mediate, escrow disbursement order, arbitrate, litigate. I call this No Meal because if you have a conflicting demand problem, you are not getting your commission, which means you are getting No Meal.
Escrow Disbursement Order
So let’s talk about each of the four escape procedures…
Mediate – This is where we hire a professional mediator. The mediator says, “Give the money to the buyer.” But this is non-binding so if the seller is not happy, he can sue.
Escrow Disbursement Order – This is where the Florida Real Estate Commission (FREC) decides. That’s what’s happening right now at the meeting. The members of the Commission heard from the buyers and sellers in each case, and they decide who gets the money.
Arbitrate – This is where we hire a professional arbitrator and the arbitrator decides. If the arbitrator says, “Give the money to the seller,” the buyer can’t sue. Why not? Because this is binding. We agreed beforehand that no one would sue anyone.
Litigate – This is where we go to court and let the judge decide.
The two parties can choose any of the four things. There is no hierarchy, so one is not better than the other. Whatever method the buyer and seller agree to is fine. Let’s say that they decide to go the EDO route. The broker requests an escrow disbursement order. The two parties realize that this is going to take a while, so one of them sues the other. At that point, the broker has 10 days to notify FREC, “Never mind. We don’t need your EDO anymore. We’ve got it covered.”
In summary, notify FREC within 15 days. Implement one of the for escape procedures within 30 days. If you request an EDO, then decide to go another route, notify FREC within 10 days that you don’t need the EDO.
If you want to see this in action, come on down to the FREC meeting. If you missed this one, they meet every month. This is almost as much fun as real estate school was.
Please note that neither I, nor anyone in the Climer family, have any affiliation with Climer School of Real Estate. My father, Ron Climer, sold Climer School of Real Estate in 2014. You can find me at Demetree School of Real Estate.