Real estate purchases are often the most expensive item any individual will purchase. This transaction often involves a deposit, a small portion of a proposed offer on the piece of property set aside to ensure the seller the buyer is serious about the offer. The buyer generally places the deposit into escrow.
Who manages the escrow account? Florida state law requires a third party serve as the escrow agent. Generally, this individual is either the buyer or seller’s real estate brokerage or an attorney.
State law requires the escrow agent to hold the deposit in accordance with the terms of the contract. These terms generally include a provision that allows for the release of the deposit during the closing of the deal, unless the contract has specific terms that provide otherwise.
What are common escrow disputes? There are situations when a buyer may demand return of a deposit placed within escrow. The most common example involves a seller’s failure to properly accept the offer. In these cases, the escrow agent can often return the deposit to the buyer. Other disputes can involve the amount of escrow or when to complete a deposit.
If a dispute escalates, the buyer and seller may need to attempt mediation or arbitration to resolve the matter. These are both forms of alternative dispute resolution used to resolve a dispute before the parties move to traditional litigation. In addition to the expense related to the issue itself, the resolution may include liability for the losing party to cover attorney’s fees and court costs.
Will the escrow agent treat the parties differently? The escrow agent acts as a fiduciary. As such, this individual is required to conduct him or herself as a “reasonably prudent person” would with diligence to the escrow terms.
An escrow agent can be liable for any breach of this duty. The can translate to monetary awards by either party to the transaction or a fine from the state.