If you are a Buyer planning to purchase a home, there’s a pretty good chance you’ll be required to give an “escrow” deposit when you and the Seller come to a written agreement and the property is “under contract.”
In Central Florida, an “escrow” deposit is synonymous with an “earnest money” deposit. While the amount of the deposit is negotiable, having it held in an “escrow account” is not.
The Florida Realtors-Florida Bar (often referred to as the FAR-BAR) Contract for Sale and Purchase requires that the escrow deposit be held in a third-party account, either managed by the Real Estate Company or the Title Company, whichever entity responsible for “holding” the funds.
In the event a dispute occurs over the funds, the release will determined by the rules governing the entity holding them.
If the funds are held by a Real Estate Company, an escrow Escrow Disbursement Order can be issued by the Florida Real Estate Commission (at no charge to the parties involved in the dispute). If the funds are held at a Title Company, they will likely only be released if the parties agree during mediation, when dictated in arbitration or when there is litigation and and order is given by the Court.
With the above being said, it’s important for Buyers to know where their escrow money is being “held” AND that they understand that if held by a Title Company, the likelihood of recovering their full funds when a dispute arises is highly unlikely.
Since the Contract for Sale and Purchase lends itself to having the Seller dictate the Escrow Agent (unless negotiated when the Contract is written), it’s reasonable to assume that escrow monies may be eaten up by mediation, arbitration or attorney’s fees unless the parties can come to a compromise beforehand.
Often times, Buyers and Sellers become so emotionally engaged in a dispute that they often spend a lot of time and lose a lot of sleep fighting for money that they believe they are entitled to...only to end up with less of all three.
Even though it may be hard to accept, it’s always smarter to try and compromise when there is an escrow dispute. By doing so, typically both the Buyer and Seller keep more money (even if they agree to split it) than they would have if the case goes all the way to Court.
Happy Buying!
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