The most common kind of escrow dispute involves a situation in which both buyer and seller make a claim on the buyer’s earnest money deposit in connection with the purchase of real estate. The escrow dispute arises when both buyer and seller believe they are each entitled to the buyer’s earnest money deposit. The escrow account in this case may be frozen until both parties can resolve their dispute. Such a situation can be bad news for the buyer. The buyer’s earnest money deposit is generally held in escrow by the escrow agent and this means the buyer won’t have his or her money back until the dispute is resolved. Escrow disputes can be costly, frustrating, and confusing.
How are escrow disputes resolved? The contract controls. There should bean escrow provision in the contract that sets forth the steps needed to be taken by buyer, seller, and escrow agent to get the escrow dispute resolved. Usually, real estate contracts have contingencies that permit a buyer to back out of the contract in certain situations. However, if a dispute arises, the escrow company may not be able to return the money. Sometimes the contract will have a clause that requires both parties to enter into mediation to resolve the disagreement. Other contracts may have provisions that allow a neutral third party to come in and resolve the dispute. Other contracts mandate the escrow agent to hire an attorney to file an interpleader law suit in the Circuit Court where the property is located, deposit the funds with the court and let the court decide who is entitled to the buyer’s earnest money deposit. A lawsuit can be a timely and costly process, so it is often best if both parties can reach a resolution through mediation or through out of court assistance of their real estate lawyers. Are you dealing with an escrow dispute? Legal Counsel, P.A. is a real estate law firm in Orlando, Florida that may be able to assist you. Have questions? We have answers. Contact Legal Counsel, P.A. today at 407-982-4321.
In Florida What Can Happen if an Escrow Dispute Arises?
A title company can not unilaterally decide an escrow dispute and release the money to a particular party. If the instructions don’t match or if there is a dispute between the buyer and the seller about releasing the funds, then both parties must reach a resolution for funds to be released. The escrow company will generally give both parties a period of time to resolve the issue by providing matching written instructions. In Florida, the title company must follow the instructions in the contract or obtain unanimous, written consent from both the buyer and seller as to who ultimately will receive the escrow money and how much that person will receive.
Because an escrow dispute doesn’t prevent the seller from advertising the property or even from selling the property, it is often in the interest of the buyer to get the issue resolved. If you have found yourself in the middle of an escrow dispute, consider speaking to Legal Counsel, P.A., an Orlando, Florida real estate law firm today. Our real estate lawyer can review your situation, assist you with resolving the issue, and can take the issue to court, if needed. Have questions? We have answers. Contact Legal Counsel, P.A. today at 407-982-4321.
Preventing Escrow Disputes Before They Start
The best way to avoid an escrow dispute is to prevent the dispute from happening. The best way to do this is to have a clearly-worded real estate contract in place that clearly outlines and sets forth each party’s responsibilities and rights, steps to follow if there is an escrow dispute, and what happens if there is no resolution to the escrow dispute. Real estate contracts may have a range of contingencies that must be met. If any of the contingencies are not met, then the earnest money must be returned. Some examples of contingencies might include a satisfactory completion of a home inspection or the seller’s ability to obtain financing at a market interest rate. Contingencies can protect the buyer from unexpected surprises, and they also make clear to the seller what requirements must be met for the sale to go through. A well-written real estate contract, when both parties follow through on their obligations, can prevent disputes from arising, or, if a dispute arises, it can clarify each party’s rights so that issues can most likely be resolved outside of court. However, if the escrow dispute must go to litigation, a well-written contract can also protect both parties. If disputes go to court, the losing party may be required to pay the court fees of the winning party. A clearly-worded contract can offer additional protection so that each party can more clearly honor their contractual obligations. Are you considering buying or selling property in Orlando, Florida? Or are you facing an escrow dispute? Have questions? We have answers. Contact Legal Counsel, P.A. today at 407-982-4321.