What Is an Escrow Agreement?
In a Florida real estate transaction, neither the buyer nor the seller should hold the buyer's earnest money deposit. Instead, the money is placed with a neutral third party, the escrow agent, who holds it until the transaction closes or falls apart.
The escrow agreement establishes the rules governing the escrow: when the agent must release the funds, to whom, and under what circumstances.
Who Serves as Escrow Agent?
- Title Companies — The most common escrow agent in Florida real estate transactions.
- Real Estate Brokerages — The listing broker's office often holds escrow deposits in their trust account.
- Attorneys — Real estate attorneys frequently hold escrow funds in their IOTA (Interest on Trust Accounts) accounts.
Common Escrow Disputes
Escrow disputes are among the most frequently litigated issues in Florida real estate:
- Conflicting Demands — The buyer demands the deposit back (claiming the seller breached). The seller demands the deposit (claiming the buyer defaulted). The escrow agent has two competing claims and cannot release the funds to either party.
- Interpleader — When the escrow agent receives conflicting demands, Florida law allows them to file an interpleader action (Florida Rule of Civil Procedure 1.240), depositing the funds with the court and letting the judge decide who gets the money.
- FREC Escrow Rules — If a Florida real estate broker holds escrow and receives conflicting demands, the broker has 15 business days to notify the Florida Real Estate Commission (FREC) and either resolve the dispute or file interpleader.
Related Terms
- Earnest Money Deposit — The funds most commonly held in escrow
- Contract — The purchase agreement that triggers the escrow
- Title Insurance — Often provided by the same company serving as escrow agent
Barnes Walker Escrow Disputes
Barnes Walker's real estate litigators represent Florida buyers and sellers in escrow deposit disputes, aggressively pursuing release of improperly held funds and defending against wrongful forfeiture claims through interpleader actions and contract enforcement. Request a legal inquiry for assistance.
Florida Law Reference
Fla. Stat. § 475.25
Florida law requires real estate brokers to maintain escrow accounts for deposits and establishes dispute resolution procedures when buyer and seller disagree over earnest money.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC