Posted on Friday, August 18th, 2023

business man holding money buy house business and laptop computerEscrow accounts are commonly used in Florida for various transactions, including real estate, business, and personal transactions. These accounts serve as a way to hold funds or documents until certain conditions are met, protecting both parties involved in the transaction. However, with the benefits of real estate escrow accounts comes the need to comply with Florida escrow rules, which regulate the handling of escrow funds and prevent fraudulent activity.

In this list of frequently asked questions, we will explore the critical aspects of Florida escrow rules and help you better understand the legal requirements and considerations when dealing with escrow accounts in Florida.

What is an escrow account?

An escrow account is a type of account in which a third party, such as a title insurance company, can hold funds or documents until a specific event occurs, such as the closing of a real estate transaction, then can disburse those funds at the direction of the parties.

Who typically holds the escrow account in a real estate transaction in Florida?

The escrow account is typically held by a real estate brokerage firm, a title insurance company or a law firm or attorney involved in the real estate transaction.

How much money is typically held in an escrow account in a real estate transaction in Florida?

The amount of the earnest money deposit that is held in an escrow account can vary depending on the circumstances surrounding the transaction. For example, if it is a buyer’s market, the buyer may have more negotiating power and may limit their deposit to a smaller amount, such as 1% of the purchase price; however, on the flip side, if it is a seller’s market, the seller may not be willing to entertain any deposits for less than 10%, 15% or even 20% of the purchase price.

Can the funds in an escrow account be released before the closing of the transaction?

Most times, the funds in an escrow account can only be released once all of the conditions to close under the terms of the purchase and sale agreement have been met, and the parties have provided authorization to close and to disburse. At times, the parties may agree to amend the purchase and sale agreement in order to permit for the release of the deposit to the seller before the closing of the transaction, but this comes with many risks, so it is advised that you speak with a Florida real estate lawyer to understand the risks before agreeing to release the deposit before the scheduled closing.

What happens to the funds in an escrow account if the transaction falls through?

Most times, if any contingencies remain pending, and the transaction falls through, the funds in the escrow account will typically be returned to the buyer, unless there is a dispute over who is entitled to the funds. On the flip side, if all timelines have been satisfied and all contingencies have been met, and the transaction falls through, the funds in the escrow account will typically be disbursed to the seller, unless there is a dispute over who is entitled to the funds. If a dispute exists and the parties are unable to agree on who the funds in the escrow account should be returned to, the escrow agent will likely have to interplead the funds into the court registry, so that the dispute can be litigated in court.

To avoid scenarios where a deposit paid into escrow later becomes the subject of an escrow dispute, it is always advisable that you are always in constant communication with your Real Estate Lawyer in Orlando from the law office of Nishad Khan, P.L.

What happens if an escrow agent misuses funds held in an escrow account?

If an escrow agent misuses funds held in an escrow account, they may be subject to disciplinary action and may be required to pay restitution to the affected parties.

Are there any restrictions on the types of transactions that can use an escrow account in Florida? No, escrow accounts can be used for various transactions, including real estate, business, and even personal transactions.

How can a Real Estate Lawyer in Florida help?

With the help of a real estate lawyer in Florida, you can rest assured that your escrow funds are handled legally and ethically and that your interests are protected at every step of the transaction process.

At Nishad Khan, P.L., we understand that navigating the intricacies of Florida escrow laws can be challenging. Our team of experienced Orlando real estate attorneys is well-versed in the latest legal requirements and regulations surrounding escrow in real estate. We are dedicated to helping our clients comply with these laws and avoid any potential legal issues.

We hope that this list of frequently asked questions has provided valuable insight into the world of Florida escrow laws. Please contact us today to learn more about how we can help you with your escrow-related legal needs.