So you are under contract and now you want out of the contract. What is going to happen to the earnest money deposit? If the reason you want out is because you can't get a loan and you have tried a few banks and a few brokers and made diligent effort to obtain financing you will get your money back.
If the Inspection Period has ended and there is any other reason you want out of the contract and the seller refuses to give you the money you have an escrow dispute. If the earnest money is in an escrow account at a title company or an attorney you go to court if you want to fight about who gets the money. A benefit of putting the money in a real estate company's escrow account is you have a free way settle a dispute.
A broker has 15 days from the last person's demand for the money to file the appropriate paper work. The broker cannot decide to give the money to the buyer or the seller. The broker must simply fill out the paper work and submit it to the Florida Real Estate Commission. The broker can not take money from a salesperson to give to a buyer or seller. A broker can not take money from a salesperson's commissions on future sales to cover the broker's legal fees that may result if they make a decision to give the money to a party without the approval of all parties. The broker will be open to FREC penalties and civil liability if they give the money to a party without all parties agreement in writing. This all seems pretty simple to me, but there could be a broker that doesn't know this. I have the emails from a broker proving that he had NO idea how to handle an escrow dispute.
Say you are the buyer and you give the seller a Release and Cancellation, but the seller refuses to sign it. The seller then makes an offer to give you 50% of the money back. If you say "no" and you go back and forth until the seller decides they are going to make claim to the 100% of the money and you want 100% of the money then final date of demand is the date when the buyer and seller have made it clear that they are both making claim to the earnest money deposit. Now there is an escrow dispute.
The broker can then use 1 of 4 settlement procedures when a broker has "good faith doubt" according to Florida Statute 475.25 (1) (d) 1.
1) FREE SOLUTION! Both the buyer and seller must agree to this. The money must be in an escrow account at a real estate company. The broker can ask FREC to issue an Escrow Disbursement Order to determine who is entitled to the escrowed property, if both parties agree. If the buyer and seller both want an Escrow Disbursement Order and the broker refuses and sends the matter to court the broker can be liable for any loss, court costs and attorney fees to the loosing party since the broker denied the buyer and seller the opportunity to pursue a free settlement procedure. The broker could also be subject to FREC discipline. The broker should disburse funds to the proper party after receiving the Final Order from FREC.
2) The buyer and seller can agree to arbitrate the matter.
3) The broker can file an interpleader with the court.
4) The buyer and seller can agree to mediate the matter. The mediation must be completed within 90 days or the broker must use a different settlement procedure.
The buyer or seller can commence a civil lawsuit regardless of the broker's actions. If a judgment is obtained and the broker fails to pay the judgment a complaint may be filed against the broker for failing to pay the judgment at MyFloridaLicense.com.
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