What is the Florida Real Estate Recovery Fund?

The Florida Real Estate Recovery Fund is one of those topics that shows up on the exam almost every time. Students who know the key numbers cold walk into the exam with easy points. Students who don't often miss questions they should have gotten right. Here is everything you need to know.

What is the Purpose of the Recovery Fund?

The Recovery Fund exists to protect members of the public — buyers, sellers, landlords, tenants — who suffer a financial loss because of the fraudulent, dishonest, or negligent conduct of a licensed Florida real estate professional. The fund is maintained by the Florida Real Estate Commission (FREC) and is funded through a portion of real estate license fees.

The key word is licensed. The Recovery Fund only applies to losses caused by a licensed real estate agent. If someone is acting without a license, the Recovery Fund does not apply.

The Key Numbers You Must Memorize

These numbers are tested directly on the Florida real estate exam. Memorize them before exam day:

If the Recovery Fund pays out a claim on behalf of a licensee, that licensee's license is automatically suspended until they repay the full amount plus interest. This is another fact the exam loves to test.

Who Can File a Claim?

To file a claim against the Recovery Fund, a person must meet these requirements:

• They must have suffered an actual financial loss
• The loss must have been caused by a licensed real estate agent
• The loss must be the result of fraud, misrepresentation, deceit, or conversion of trust funds
• They must have already obtained a civil court judgment against the licensee
• They must have attempted to collect from the licensee first and been unable to do so

Who Cannot File a Claim?

Not everyone can file against the Recovery Fund. These people are specifically excluded:

• Other licensed real estate professionals — agents cannot file claims against other agents
• The licensee themselves
• Anyone whose loss was not caused by a licensed agent acting in their capacity as a real estate professional

What Happens to the Licensee?

When the Recovery Fund pays out a claim on behalf of a licensee, the consequences for that licensee are serious:

• Their real estate license is automatically suspended
• They cannot get their license reinstated until they repay the full amount paid out plus interest
• They may also face additional disciplinary action from FREC including fines and further penalties

How This Shows Up on the Exam

The Florida real estate exam typically tests the Recovery Fund in a few specific ways:

• Asking for the maximum dollar amount per transaction ($50,000)
• Asking for the maximum lifetime amount per licensee ($150,000)
• Asking what happens to the licensee's license after the fund pays a claim (automatic suspension)
• Asking who is eligible or not eligible to file a claim

Quick Recap — What to Know for the Exam

• Maximum per transaction: $50,000
• Maximum per licensee lifetime: $150,000
• Fund pays claims for losses caused by licensed agents only
• Other licensees cannot file claims
• After the fund pays, the licensee's license is automatically suspended
• Licensee must repay the full amount plus interest to get reinstated