2 minute read
Realtor® Attorney Joint Committee
The Ins and Outs of Escrow Deposits
By: Mallory Moretti, Esq., Berlin Patten Ebling, PLLC.
Whether using the Residential Contract for Sale and Purchase (the “Standard Contract”) or the “AS-IS” Residential Contract for Sale and Purchase (the “ASIS Contract”), both Contracts allow an initial deposit to be held in escrow (the “Escrow Deposit”). The Escrow Deposit is made payable and delivered to the Escrow Agent. Both contracts allow for the selection between whether the Escrow Deposit accompanies the offer, or is to be made within a certain number of days after the Effective Date, if blank three (3) days, which is most commonly seen.
STANDARD AND AS-IS CONTRACTS
Section 2(a) of the Standard and AS-IS Contract pertains to the deposit and Escrow Agent. The Escrow Agent section must always be completed. If the Escrow Agent is a title company or an attorney, the Escrow Agent’s name, address, and telephone number must be included pursuant to Rule 61J2-14.008 of the Florida Administrative Code. “TBD” should never be used in this section. If the seller has a preference for a different Escrow Agent, seller could counter buyer’s offer and change the Escrow Agent information.
What happens if the buyer does not make the deposit timely under the contract? It is important to mention that time is of the essence under the Standard and AS-IS Contract. Section 15 of the contract states that if buyer fails to make payment of the deposit, within the time specified, Seller may elect to recover and retain the deposit(s).
But what if the buyer made the initial deposit and just forgot to make the additional deposit? Is the seller entitled to recover the entire deposit or just the initial deposit? Per the contract, deposit is defined as all deposits paid or agreed to be paid. Therefore, the seller may elect to recover the initial deposit and the additional deposit to be paid. Calendaring deadlines is crucial!
A SMOOTH CLOSING
It is the closing agent’s responsibility to ensure a smooth and timely closing. Inevitably, there might be a transaction where a list minute glitch pops up such as: broken window at a walk-through, roof tiles cannot be repaired in time for Closing, etc. When a last minute issue arises and the parties do not want to extend Closing nor are they agreeable to a credit, a postclosing escrow agreement is an option. There are many questions that need to be posed prior to agreeing to a post-closing escrow. A few are as follows: is financing involved? Are there repair estimates in place? How will the escrow be released? How difficult is the issue to resolve?
This article is meant as a guide for educational purposes only. It is not intended to serve as legal advise and should not be used as a substitute for consultation with an attorney.
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