Florida Escrow Deposit Disputes – Real Estate Law

FLORIDA ESCROW DEPOSIT DISPUTES
Law Offices of Michael D. Stewart
www.TheMiamiLaw.com
866-438-6574

The Florida Statutes and Administrative rules provide procedures
governing how one holding an escrow deposit should handle a dispute
between buyer and seller.

According to The Florida Real Estate Commission (FREC), real estate
sales agents must give their broker funds received in connection with
a real estate deal no later than the end of the next business day
following receipt of the funds. The broker then has three (3) days to
place the funds in his or her escrow account.

A problem arises for the broker and for the other party when one of
the parties to the real estate transaction breaches the purchase and
sale agreement and wants to back out of the deal. Usually, the
Purchase and Sale Agreement will late out the procedures to be
followed in the event of a dispute.

The broker is charged with ultimate responsibility for the funds held
in his or her escrow account, and if the broker were to release the
funds to one of the parties who it is later revealed was not entitled
to those funds, the broker could be held liable under the law.

Therefore, the broker will be faced with a number of choices when one
or both parties, buyer and seller, demand the real estate deposit.
The first option is to give it to the party the broker believes is
entitled to the money. Assuming the broker is not an attorney, this
can lead to problems for the broker as there may be legal issues that
the broker has not considered.

Another option is for the broker to file an interpleader lawsuit,
whereby the broker brings both the buyer and the seller into a lawsuit
to determine who is entitled to the funds. Additionally, the buyer or
seller on their own accord could also file an interpleader lawsuit
against the other to determine the proper disbursement.

Another option for the broker is to notify FREC of the dispute and
request that FREC issue an escrow disbursement letter indicating to
which party the money should go. If the broker follows the advise of
the FREC, the broker cannot be liable if it is later found that the
money went to the wrong party.

There is also a Florida Real Estate Recovery Fund which can assist one
who has lost their deposit improperly to obtain up to $50,000.00 from
the fund.

A final option for the parties to consider is either arbitration or
mediation, whether contained in the purchase and sale agreement or
otherwise. Often these alternative dispute resolution procedures can
assist parties without the necessity of full blown litigation. In
real estate deals, emotions can be high and mediators are trained to
cool the parties down and to have them look at the issues in a more
objective way than they might have.

The Law Offices of Michael D. Stewart
TheMiamiLaw.com
305-590-8909
866-438-6574