Real estate transactions involve six and seven figure deals. Deals of this magnitude require more than just a handshake, they require a deposit. But where does the deposit go? Should the buyer or the seller be responsible for the deposited funds?
Where does the money go? The money generally goes into an escrow account. A third party will manage the escrow account. This third party is often a real estate brokerage or attorney involved in the transaction.
Is there a conflict of interest if an escrow agent also represents a party to the transaction? Florida lawmakers have passed laws that bind escrow agents by fiduciary duties. This means the law requires the agent to hold the funds as outlined by law — not to focus solely on the benefit to his or her client. As a result, an injured party could hold an escrow agent liable for a failure to abide by these duties.
What are the duties of an escrow agent? Generally, the law requires an escrow agent to abide by the language of the contract and act as a reasonably prudent person. Once the role of an escrow agent is accepted, the agent has duties to both parties to the transaction with regard to the keeping of the deposit.
How much of a deposit is required? As discussed in a recent piece in the Coastal Breeze News, deposits in Florida generally involve a $1,000 deposit with an initial offer. If the seller accepts the offer, the buyer will generally agree to increase the deposit to 10 percent of the agreed upon purchase price within 10 to 15 days of acceptance.