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escrow laws in FloridaEscrow laws in Florida

Escrow Laws in Florida: What You Need to Know

28 Jul 2021

Suppose you are buying or selling a property in Florida. In that case, you need to understand why lenders, real estate agents, and brokers talk a lot about “title and escrow.”

Even though many people use both words as one term, each word refers to a different proceeding. In this article, you will find out an overview of escrow laws in Florida. 

Understanding Escrow Laws in Florida – An Overview 

When buying or selling a property, you realize a real estate transaction involves much complexity. Usually, an average transaction will have multiple factors intermingled, such as credit reports, mortgages, insurance, inspections, titles, HOAs, and more.

In essence, an escrow service is a safeguard that everyone involved in the transaction will keep to their respective agreement. 

Hence, it is a reliable third-party holding all the money, titles, personal property, or anything of value until all the parties involved in a transaction fulfill their contractual commitments.

Therefore, escrow mitigates fraud risk while helping the buyer or seller stay up to date with all other parties involved in a real estate transaction/ For example, such parties can be agents, brokers, lenders, or lawyers.

Accordingly, when you want to purchase a home, your agent and the seller’s agent will need to agree to an offer. Once both parties are satisfied with an offer, escrow is open to receive all the necessary information regarding the transaction.

This way, the escrow service will take care of all funds, bills, and documents involved with a transaction. It is also the role of the escrow service to handle all the documentation and ensure all parties follow the instructions to ensure a smooth closing process.

Depositing Money into an Escrow Account 

Although the escrow agent can be anyone, the best approach is to hire an expert escrow attorney in Florida to serve as a neutral party in the transaction. Commonly, the buyer’s attorney acts as the escrow agent in a real estate transaction.

Nonetheless, any escrow agent must exercise their duty as the deposit holder separately or from any obligation owed to a client or customer. In this sense, an escrow agent has responsibilities to both parties involved in the transactions. 

Rules for Escrow Brokers 

In Florida, the state law adopted mandatory rules regarding the duties of escrow brokers. As provided by Florida Statutes (Section 475.25) and Florida’s Administrative Code, brokers must comply with all legal provisions to avoid liability. 

When a broker’s associate receives a deposit, they must deliver the deposit to the broker no later than the end of the next business day. No associate is authorized to hold the funds in a transaction. Only licensed real estate brokers can have an escrow fund.

Escrow Account 

Then, you need to deposit all the transaction funds into an escrow account. An escrow account is used solely for holding money that does not belong to the broker (unless it refers to an amount to cover only miscellaneous expenses).

Plus, state regulations provide that the broker must deposit the escrow funds into an escrow account “immediately.” In this context, this provision means depositing into an escrow account no later than the end of the 3rd business day following receipt. 

Escrow Disputes 

Typically, an escrow dispute will arise between a buyer and a seller. In Florida, when a broker doubts who is entitled to the escrow or has received conflicting demands, they must provide notice to the Florida Real Estate Commission (FREC) in writing. 

Also, the broker has to send the notice within 15 business days after a doubt arises or the involved parties incur conflicting demands. Then, the broker has three main options to establish a settlement procedure within 30 business days after the doubt or demand.

First, the broker can file a request for an escrow disbursement with the FREC. In this case, the paperwork would include the transaction contract and other documents needed by the FREC to issue a disbursement order. 

Second, it is possible to submit the escrow dispute to arbitration or mediation, as long as the broker has the written consent of all parties involved.

Lastly, the broker can file an interpleader action, which is a lawsuit used by the broker to request a court to determine who is entitled to the deposit. Usually, the court receives the deposit held in escrow. At the same time, the disputing parties need to litigate between themselves as to entitlement. 

Escrow Laws in Florida – Work with Marina Title Today 

At Marina Title, we have a team of title and escrow experts to provide security and effectiveness for all parties involved in a real estate transaction. 

Waste no time. Call us today at (305) 901-5628 or send us an email at Romy@MarinaTitle.com to schedule a consultation.

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