The Florida Statutes and Administrative rules provide procedures governing how one holding an escrow deposit should handle a dispute between buyer and seller.
According to The Florida Real Estate Commission (FREC), real estate sales agents must give their broker funds received in connection with a real estate deal no later than the end of the next business day following receipt of the funds. The broker then has three (3) days to place the funds in his or her escrow account.
A problem arises for the broker and for the other party when one of the parties to the real estate transaction breaches the purchase and sale agreement and wants to back out of the deal. Usually, the Purchase and Sale Agreement will late out the procedures to be followed in the event of a dispute.
The broker is charged with ultimate responsibility for the funds held in his or her escrow account, and if the broker were to release the funds to one of the parties who it is later revealed was not entitled to those funds, the broker could be held liable under the law.
Therefore, the broker will be faced with a number of choices when one or both parties, buyer and seller, demand the real estate deposit. The first option is to give it to the party the broker believes is entitled to the money. Assuming the broker is not an attorney, this can lead to problems for the broker as there may be legal issues that the broker has not considered.
Another option is for the broker to file an interpleader lawsuit, whereby the broker brings both the buyer and the seller into a lawsuit to determine who is entitled to the funds. Additionally, the buyer or seller on their own accord could also file an interpleader lawsuit against the other to determine the proper disbursement.
Another option for the broker is to notify FREC of the dispute and request that FREC issue an escrow disbursement letter indicating to which party the money should go. If the broker follows the advise of the FREC, the broker cannot be liable if it is later found that the money went to the wrong party.
There is also a Florida Real Estate Recovery Fund which can assist one who has lost their deposit improperly to obtain up to $50,000.00 from the fund.
A final option for the parties to consider is either arbitration or mediation, whether contained in the purchase and sale agreement or otherwise. Often these alternative dispute resolution procedures can assist parties without the necessity of full blown litigation. In real estate deals, emotions can be high and mediators are trained to cool the parties down and to have them look at the issues in a more objective way than they might have.