The term escrow is commonly used by real estate agents, brokers, and lenders in real estate-related dealings. But what is it? If you plan to buy or sell a property in Florida, it is important to understand what escrow is and how it works. In this article, we explain what escrow is and how it works in Florida.
In its simplest definition, escrow is a financial arrangement that protects both the buyer and the seller from fraud or theft. In this arrangement, two parties use an intermediary third-party to hold money and assets until a transaction is finalized. In the real estate setting, the escrow closes only when both parties fulfill their legal responsibilities, meaning the seller has been paid and the buyer has received the property.
Florida provides rules and regulations to control the escrow process for home purchases in the state. According to Florida laws, Statutes 651.033, money must be deposited into an escrow account with a qualified financial institution such as a bank, title company, trust company, credit union, or a savings or loan association. Florida also provides strict regulations regarding:
Real estate transactions are complex, and disputes may arise. If a dispute arises amid negotiations, the funds in the escrow account often become the center of interest. Many factors can contribute to escrow disputes. For example, if one of the involved parties is unable to meet closing conditions, the home closing may be canceled and escrow funds returned to the buyer.
In cases where both parties are unwilling or refuse to sign a written agreement authorizing the escrow agent to release the funds being held, this can lead to a dispute. In addition, if a real estate transaction fails, the involved parties may fail to agree on who is entitled to the funds held in an escrow account.
While escrow disputes vary from one case to another, they can be time consuming and expensive. In most cases, however, there are guidelines established within the real estate contract that will determine who will receive the funds in escrow.
Escrow plays a major role in the purchase and sale of real estate in Florida. While escrow disputes are rare, they can occur. To avoid an escrow dispute, you should work with an experienced title and escrow attorney to guide you through the process and review closing documents before signing.
If you have questions about escrow or need assistance with the closing of a home, call us at (904) 853-5591 to see how Atlantic Coast Title & Escrow can help.