Florida commission law: escrow disputes, referral fees and lien acts

In this article

Written by

Kooky

Builder of Shaka, the payment router that pays every agent their commission on closing date.

About Kooky and Shaka →

In Florida, the rules on real estate commission are not found in a fee schedule. They sit inside the licence law, chapter 475 of the Florida Statutes, and they deal less with how much is paid than with who may be paid, through whom, and what happens to the money that passes through a brokerage on the way to a closing. A commission contract can be invalid because of a licence problem. A deposit can sit frozen in an escrow account because two parties both claim it. A commercial broker can hold a lien, but only over a particular pot of money and only after a particular disclosure.

This guide follows that money through the statute as the Florida Legislature publishes it, and through the notice rule of the Florida Real Estate Commission, the body the statute calls "the commission". It covers the licence condition behind every commission contract, the rule that a sales associate is paid through the employing broker, referral fees to unlicensed people and to brokers in other states, the penalties, the handling of deposits, the four procedures for a disputed deposit with their deadlines, and the two commercial lien acts. Every rule described here is Florida law only, stated as a general rule; how it applies depends on the facts of the case.

Rule 61J2-10.032 as set out in a Florida Real Estate Commission document dated 23 October 2023, and section 475.25(1)(d) of the Florida Statutes.

A valid licence comes before a valid commission

The starting point is section 475.41, headed "Contracts of unlicensed person for commissions invalid". As the 2026 edition of the Florida Statutes gives it, no contract for a commission or compensation for an act or service that the chapter lists as brokerage work is valid unless the broker or sales associate had complied with the chapter's licensing and renewal requirements at the time the act or service was performed. The history note on the Legislature's page traces the section to an act of 1927, with its latest amendment in 2003.

The test looks at a moment in time: the day the work was done, not the day the commission falls due. And the consequence falls on the contract itself: the section sets no fine, it says the agreement to pay is not valid.

The criminal side is in section 475.42. Paragraph (1)(a) says a person may not operate as a broker or sales associate without holding a valid, current, active licence. According to the Legislature's text, a breach of that paragraph by an individual is a felony of the third degree, and a corporation is punished under the general fines section of the criminal code, section 775.083. The other breaches in section 475.42 are, as a rule, misdemeanours, as explained further down.

The sales associate is paid through the employing broker

Florida's licence law ties each sales associate to one registered employer, and three paragraphs of section 475.42(1), read here in the 2025 edition published by the Florida Senate, turn that tie into rules about money.

Paragraph (b) says a licensed sales associate may not operate as a broker, and may not operate for any person other than the registered employer. Paragraph (c) is the mirror image: a broker may not employ, or keep in employment, a sales associate who does not hold a valid and current sales associate licence. An active broker may obtain a sales associate licence by surrendering the broker licence, without paying a fee beyond the active broker licence fee.

Paragraph (d) is the one that governs the payment itself. It has two limbs. A sales associate may collect money in connection with a brokerage transaction only in the name of the employer and with the employer's express consent. And a sales associate, whether licensed or not, may bring a court action for a commission only against the person registered as their employer at the time the service was performed.

Read together, the limbs describe a single channel: money is collected in the brokerage's name, and the sales associate looks to the broker for their share. If the client does not pay, the paragraph gives the sales associate no court action against the client. It also fixes which broker may be sued: the one registered as employer when the work was done, which matters when an associate changes brokerage before a closing.

Referral fees: unlicensed people and out-of-state brokers

Section 475.25(1) lists the grounds on which the Florida Real Estate Commission may discipline a licensee. Paragraph (h) is the commission-sharing ground. It applies to a licensee who has shared a commission with, or paid a fee or other compensation to, a person not properly licensed under Florida law, either for referring real estate business or for any of the services the chapter lists as brokerage. The paragraph states that it makes no difference whether the referral was made from inside or outside Florida.

The same paragraph then carves out the cross-border case. A licensed Florida broker may pay a referral fee or share a real estate brokerage commission with a broker licensed or registered under the laws of a foreign state, so long as the foreign broker does not violate any law of Florida. The permission comes with its condition attached: it covers a referral fee or a share, and it ends where the out-of-state broker breaches a Florida law.

A worked example, with illustrative figures that are not statutory rates. Assume a Florida home sells for US$400,000, the listing brokerage's fee is 3 per cent, and the brokerage has agreed to pay 25 per cent of that fee for the referral that produced the seller. The fee is US$12,000 and the referral share is US$3,000. If the US$3,000 goes to a broker licensed in another state who did nothing in Florida that breaches Florida law, paragraph (h) expressly allows it. If the same US$3,000 goes to a person with no licence, the payment is the conduct paragraph (h) describes, and it is the paying licensee who faces discipline.

There is one narrow statutory exception for small payments in the rental market, in section 475.011(13). A property management firm or an apartment owner may pay a finder's fee or referral fee to an unlicensed person who is a tenant, for introducing the parties to an apartment rental. The fee may not exceed US$50 per transaction, and it may take the form of cash, a rent credit or some other item of value. The unlicensed tenant may not advertise or otherwise promote services for finding prospective tenants. The subsection closes the door behind itself: paying any other finder's fee is, in its own words, a violation of section 475.25(1)(h), punishable under section 475.42.

What a breach can cost a licensee

Chapter 475 answers a commission breach on two tracks, and the statute keeps them separate.

The administrative track is section 475.25(1). According to the 2026 text, the commission may deny an application; place a licensee on probation; suspend a licence for a period of up to 10 years; revoke it; impose an administrative fine of up to US$5,000 for each count or separate offence; or issue a reprimand. The fine is counted per offence. As a worked example of the ceiling only: a complaint that the commission upheld on three separate counts could carry fines of up to 3 times US$5,000, or US$15,000. Paragraph (e) of the same subsection makes a violation of any provision of the chapter, of a lawful order or of a commission rule a ground in its own right, which is how a missed deadline under a rule becomes a disciplinary matter.

The criminal track is section 475.42. Paragraph (1)(e) prohibits conduct described in four paragraphs of section 475.25(1): (b), (c), (d) and (h). Two of those are covered in this guide: the failure to account for or deliver funds in (d) and commission sharing with unlicensed people in (h). Subsection (2) then says a violation of subsection (1) is a misdemeanour of the second degree, punishable under sections 775.082 or 775.083, unless the chapter prescribes a different penalty, as it does for unlicensed practice.

Subsection (2) also explains how the tracks relate. The state may prosecute under section 475.42, under another criminal statute, or under both, but the sentence may not exceed the more severe of the penalties. Civil, criminal and licence proceedings may all arise from the same facts, and the result of one does not control the others.

One further paragraph of section 475.25(1) touches the fee before it is ever earned. Under paragraph (r), a listing agreement must contain an expiration date, a description of the property, the price and terms, the fee or commission, and the signature of the principal or principals, and the licensee must give the principal a signed copy within 24 hours.

Where a deposit must be held

Commission and deposits meet in the brokerage's escrow account, and section 475.25(1)(k) sets the ground rules. A broker who receives money entrusted to them must place it promptly in escrow. The 2026 text names the places it may go: a title company, a bank, a credit union or a savings and loan.

The paragraph also lets a broker keep a limited amount of their own money in an escrow account. A broker may place and maintain up to US$5,000 of personal or brokerage funds in a property management escrow account, and up to US$1,000 of personal or brokerage funds in a sales escrow account. The commission sets the record-keeping rules, and the paragraph gives a broker a reasonable time to correct escrow errors where there is no shortage of funds and no significant harm to the public. Paragraph (v) adds a duty on the broker to review the brokerage's trust accounting procedures.

A disputed deposit: the four procedures

Section 475.25(1)(d) makes it a ground for discipline to fail to account for or deliver money or property that belongs to another person, including escrowed funds. The difficulty arises when the broker cannot tell who that person is. A sale falls through, the buyer demands the deposit back, and the seller demands it as well. Paying either one risks being wrong.

The statute resolves this by giving the broker a defined way out. A licensee who has doubts about who is entitled to escrowed property, or who receives conflicting demands for it, must promptly notify the commission and then promptly institute one of four procedures.

Two of the routes need agreement and two do not, so a broker facing parties who will not cooperate is left with the commission's order or the court. Interpleader is the court route in which the holder of a fund asks the judge to decide between the claimants.

Mediation carries the only deadline in days that the paragraph itself sets. The department may conduct mediations or contract with public or private mediators. The mediation must be successfully completed within 90 days following the last demand. If it is not, the licensee must promptly use one of the other three procedures. The parties agree in writing on how the mediation is paid for.

The reward for following the path is spelled out. If the licensee promptly uses one of the procedures and abides by the order or judgment that results, no administrative complaint may be filed against the licensee for failing to account for or deliver the escrowed property.

The clock: 15 and 30 business days

The statute says "promptly". The figures come from the commission's rule 61J2-10.032, headed "Notice Requirements". The text used here is the version in a Florida Real Estate Commission meeting document labelled "Commission Approved Language" and dated 23 October 2023; the wording currently in force in the Florida Administrative Code was not checked against it and should be read alongside.

On the text of that 23 October 2023 document, a broker who receives conflicting demands for trust funds held in the broker's escrow account must notify the commission in writing within 15 business days of the last party's demand, and must institute one of the statutory settlement procedures within 30 business days after that last demand. Both periods run from the same event, the last demand, so they overlap rather than follow one another. Where there is no demand but the broker has a good-faith doubt about who is entitled to the funds, the same two periods run from the day the doubt arose. The rule adds that whether a good-faith doubt exists depends on the facts of each case.

The same 2023 document also covers the party who simply goes quiet. If one party to a failed sale does not respond to the broker's inquiry, the broker may send a notice by certified mail, return receipt requested, to that party's address or email address of record. The notice states that the other party has made a demand, sets a deadline for a response on the seventh business day after the notice is sent, and gives the broker's mailing address, telephone number and email address. If no response arrives within seven business days, the silence is treated as authorisation to release the funds to the other party. The effective date of the notice is the date it was last dispatched: the postmark for a certified letter, or the date of the send confirmation for an email.

Three follow-up notices complete the rule as that Florida Real Estate Commission document of 23 October 2023 sets it out. A broker who uses a procedure other than a request for an escrow disbursement order must tell the commission so within 30 business days of the last demand or of the doubt. A broker who asked for an order and is told in writing that none will be issued must institute another procedure and notify the commission within 30 business days of receiving that notice. And where a broker has asked for an order but the dispute is settled, or goes to court, before the order is issued, the broker must notify the commission within 10 business days of that event. A request for an escrow disbursement order is treated as instituted when the completed form is mailed or otherwise dispatched to the commission.

When a broker may release without those steps

The dispute machinery is not triggered every time a sale ends. Section 475.25(1)(d) names two situations in which a licensee may return the escrowed property to the buyer without notifying the commission and without starting any of the four procedures.

The first concerns residential condominiums. If the buyer of a residential condominium unit delivers to the licensee written notice of the buyer's intent to cancel the contract as authorised by section 718.503 of the Florida Statutes, the licensee may return the deposit to the purchaser. The second concerns financing. If the buyer of other real property, acting in good faith, fails to satisfy the terms of the financing clause of the contract, the licensee may likewise return the deposit to the buyer. The statute also authorises the commission to set by rule the circumstances in which a licensee may disburse without notice or procedure.

Rule 61J2-10.032, in the same 2023 document, contains its own exemption for a specific kind of sale. Brokers who hold earnest money deposits under the residential sales contract of the federal Department of Housing and Urban Development, for property that the department owns, follow the deposit requirements of that contract and are exempt from the notice and settlement procedures.

A broker caught between two demands is not asked to judge the dispute. The statute asks for a prompt notice, a chosen procedure, and obedience to its result.

The commercial sales commission lien

Part III of chapter 475, sections 475.700 to 475.719, is the Commercial Real Estate Sales Commission Lien Act. Its core section, 475.703, was enacted in 2005 according to the history note on the Legislature's page, and it gives a broker a lien for a commission earned under a brokerage agreement. What the lien attaches to is the defining feature of the act.

Section 475.703 goes on to say when a commission is earned for the purposes of the lien. It is the earlier of two dates: the occurrence of the event that the brokerage agreement itself names as earning the commission, or the date the owner enters into a contract to dispose of all or part of the property covered by the agreement, provided the commission would be payable if the sale closed under that contract. Earned is not the same as payable. The commission is payable at the time the brokerage agreement sets, and if payment is conditional on an event that never happens, the broker cannot enforce the lien for it.

The section is strict about whose lien it is. It belongs to the broker named in the brokerage agreement, and not to an employee or independent contractor of that broker. It cannot be assigned, and only the broker may enforce it. It cannot be waived before the commission is earned, and only the broker can waive it.

A lien of this kind depends on a disclosure. At or before the time the owner signs the brokerage agreement, the broker must disclose to the owner that the lien rights exist and that they cannot be waived before the commission is earned. The statute supplies model wording and treats a substantially similar statement as sufficient. The consequence of omitting it is direct: a broker may not enforce the lien for a commission under an agreement where the disclosure was not made.

The remaining sections of Part III set out the procedure, and their headings in the Legislature's table of contents show its shape: the contents of a commission notice and its delivery to the owner and the closing agent (475.705), the recording of that notice and its effectiveness (475.707), the duties of the closing agent and the reservation of the owner's net proceeds (475.709), interpleader and the deposit of reserved proceeds in the court registry, which discharges the closing agent from further liability (475.711), a civil action with an order to show cause and an award of costs and attorney's fees (475.713), the priority of a recorded notice (475.715), service (475.717) and the buyer's broker (475.719). The time limits inside those sections were not read for this guide and are not stated here.

The leasing lien, and the limit on recording

Part IV, sections 475.800 to 475.813, is the Commercial Real Estate Leasing Commission Lien Act. The Florida Senate's table of contents for the 2025 edition lists a broker's lien for a leasing commission (475.803), the contents of a lien notice (475.805), the recording of the lien notice and its effectiveness (475.807), foreclosure of the lien together with a civil action by the owner and an award of costs and attorney's fees (475.809), the transfer of the lien to security (475.811) and the subordination of the lien (475.813).

What the leasing lien attaches to, and the deadlines for its notice, are in the text of those sections, which was not read for this guide.

Both acts need to be read with section 475.42(1)(i). That paragraph prohibits placing on the public records any document that affects the title of, or encumbers, real property when the person knows it to be false, void, unauthorised or not properly executed, where it is done maliciously, to collect a commission, to coerce the payment of money, or for an unlawful purpose. A court judgment may be recorded, and the paragraph accepts that a broker may place a lien where a contract expressly permits it or the law allows it. A breach of the paragraph falls under subsection (2), the second-degree misdemeanour.

What these sources leave open

Three questions are not answered by the pages read for this guide.

The first is the rebate. Section 475.25(1)(h), as published in the 2026 edition, speaks of sharing a commission with, or paying compensation to, a person who is not properly licensed. The page does not use the word "rebate" or the word "kickback", and it does not, on its face, say when a broker may give part of a commission back to a buyer or seller in the transaction. Any commission rule on rebates, or on payments for referring title or other services, was not read here, and nothing in this guide states one.

The second is the detail of the lien acts beyond section 475.703: the contents and timing of the commission notice, how long a closing agent reserves proceeds, and the whole operative text of the leasing act.

The third is the status of the notice rule. The 15, 30, 10 and seven business-day figures above come from a Florida Real Estate Commission meeting document labelled "Commission Approved Language" and dated 23 October 2023. The history line in that document ends with an entry that carries no date, so the adoption date of that wording is not confirmed here.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

About Kooky and Shaka →