Module 6: Lesson 3 Real Estate Recovery Fund Flashcards

Module 6: Lesson 3 Real Estate Recovery Fund Flashcards

What are the qualifying characteristics for persons to be eligible for compensation under the Real Estate Recovery Fund?

• The person asking for retribution must have received a

favorable judgement in a cause of action that was the result of a real estate transaction.2. There must be notification to the Commission of a claim through certified mail; condition may be waived if Commission determines, through independent means, that the claim is valid within 4 years of the action which causes the claim to be initiated.3. It must be shown that the licensee in question is not in possession of real or personal property that can be liquidated in order to satisfy the judgement. These must first be applied to the judgement before any claim or disbursement from the fund.4. The claimant must show that they are not a person who is precluded from making a claim for recovery by Chapter 475.483(2) and the final judgement is not under appeal.Which violations are "insurable" by the Real Estate Recovery Fund?Violations of some statute stipulated by Title XXXII, Chapter 475 of Florida Statutes, specifically sections 475.25 and 475.42 For the Real Estate Recovery Fund to be available to serve its purpose, the person who committed the wrongful act

must be a broker or sales associate who:

• Was, at the time the alleged act was committed, the

holder of a current, valid, active real estate license issued under Ch. 4752. Was neither the seller, buyer, landlord, or tenant in the transaction nor an officer or a director of a corporation, a member of a partnership, a member of a limited liability company, or a partner of a limited liability partnership which was the seller, buyer, landlord, or tenant in the transaction3. Was acting solely in the capacity of a real estate licensee in the transaction.Which persons are not qualified to make a claim against the Real Estate Recovery Fund?

• The spouse of a person already making a claim or

someone who represents him or her2. A licensed broker or sales associate who participated in the transaction that is the subject of the claim.3. The person's claim is attached to a real estate transaction where the licensed broker or sales associate was the owner or controller of the property involved.4. The person's claim is attached to a transaction where the licensee was dealing on the licensee's own account.5. The person's claim is attached to a transaction where the licensee was acting other than as a broker or sales associate6. The person's claim involves a real estate transaction in which the broker or sales associate did not hold a valid, current and active license7. The judgement that results in monetary loss is not against an individual but

is against a real estate brokerage corporation, partnership, limited liability company or limited liability partnership.How is the Recovery Fund funded?From licensing fees. Additional fees are included which go into a Professional Regulation Trust Fund (in trust with the State Treasury) which establishes operating capital for each department under the jurisdiction of DBPR for the compensation of victims of the professionals operating unscrupulously in each regulated profession.Can a licensee continue to practice after the Recovery fund makes a payment to a victim on his or her behalf?No. The DBPR Secretary signs a voucher for payment. The CFO makes the payment to the party to receive payment.After the payment has been made from the fund, the license of the licensee is suspended and will remain suspended until the licensee makes payment in full to the fund including interest.

How much money is maintained in the Real Estate Recovery Fund?At least $500,00 and less than $1 million. When the fund falls below this balance, broker licensees pay an additional $3.50 per year and sales associates pay an additional$1.50 per year to replenish it.What is the purpose of the Real Estate Recovery Fund?To provide recompense to victims of real estate professionals who act unscrupulously and are unable to make good on money lost. It is part of the DBPR.What is the second purpose of the Real Estate Recovery Fund?To reimburse any licensee who is required by a court to pay damages due to a distribution of escrow money which is made in compliance with an escrow disbursement order (EDO) issued by the Commission.How much money can be paid out of the Recovery fund on a claim at a time?

• In the case of a claim against a real estate licensee by a

victim of licensee's actions, "An amount equal to the unsatisfied portion of such person's judgement or $50,000, whichever is less".2. In the case of a licensee who is being reimbursed because of an EDO issued by the Commission, "an amount equal to the judgement against the broker or sales associate or $50,000, whichever is less".3. In any or all claims arising out of a single transaction, the amount paid "shall be limited, in the aggregate, to $50,000, regardless of the number of claimants or parcels of real estate involved in the transaction".4. "Payments for claims based upon judgements against any one broker or sales associate may not exceed, in the aggregate, $150,000".

(F.S. 475.484)