What Is The National Association of Realtors Code of Ethics?

The National Association of Realtors (NAR), is a trade association of real estate professionals.  It has a code of ethics, first adopted in 1913, and was one of the first codifications of ethical duties adopted by any business group.

The code ensures that consumers are best served when NAR members co-operate with each other to further clients’ best interests.

The leadership of the NAR has devised the code and it is frequently revised and updated.

It is not the result of any legislation, nor subject to approval by any legislative body.

You need to know – What is an escrow dispute?

An escrow dispute occurs when there are conflicting demands regarding the disbursement of escrow funds

In the event of an escrow dispute, the broker must:

• notify the FREC within 15 business days of receiving the conflicting demand
• choose one of the four settlement procedures within 30 days of receiving the conflicting demand

You need to know – What is a business day?

A business day is a normal working day

Weekends and legal holiday are not considered normal working days

You need to know – What is an escrow account?

An escrow account is an account maintained for the deposit of money being held in trust for others

It is not uncommon for a broker to collect a deposit from a buyer when preparing a purchase contract; the deposit does not belong to the broker, but is being held in trust for the buyer until the contract is accepted or rejected by the seller

In this case, the deposit must be placed in an escrow account

You need to know – What does commingle mean?

To commingle (sometimes known as intermingling) is to mix funds belonging to a broker with those of other parties such as buyers, sellers, tenants or landlords

Funds belonging to the other parties are held in trust and must be kept in a separate escrow account

Commingling/intermingling is an illegal practice

You need to know – Where can an escrow account be held?

An escrow account can be held at a:

• Commercial bank
• Savings association
• Credit Union

The institution where the escrow account is held must be in the State of Florida

The account can be interest-bearing or non interest-bearing

If the account is interest-bearing, all interested parties must agree in writing who shall receive the interest earned

You need to know – What must a broker do with an earnest money deposit?

A broker who receives an earnest money deposit must place the funds in an escrow account no later than the end of the third business day after a sales associate or other employee of the company received it

If the broker chooses not to operate an escrow account the funds must be deposited in an attorney’s trust account or with a title company

You need to know – What must a sales associate do with an earnest money deposit?

Any sales associate who receives an earnest money deposit must deliver the deposit to their broker no later than the end of the next business day

You need to know – Who are escrow funds held in trust for?

Escrow funds are deposited with a third party (such as a real estate broker or attorney or title company) in trust for others

When a deposit is made with an offer to purchase real estate, the escrow funds are held in trust for the buyer, pending acceptance or rejection of the offer to purchase

If the offer to purchase is accepted by the seller and all contingencies have been cleared, the deposit funds typically become held in trust for the seller, since the deposit formed a part of the binding contract to purchase the real estate

You need to know – What is an earnest money deposit?

An earnest money deposit (also known as a good faith deposit or binder deposit) is an amount paid in good faith by a buyer when making an offer

The deposit normally accompanies the written contract offer and will be held in trust in an escrow account

If the offer is rejected by the seller the deposit is returned to the buyer

If the offer is accepted by the seller then the deposit will become a part payment of the contract price

If, after the offer is accepted, and the buyer defaults, the deposit is typically forfeited to the seller as liquidated damages arising from the buyer’s failure to complete the purchase