Escrow Disputes – The Basics

1. When a transaction falls through a Release and Cancellation is signed by all parties

2. The allocation of Escrow funds is on the document and agreed to by all parties

3. If all parties are not in agreement, then we have an Escrow Dispute

4. It is irrelevant if the party not in agreement is incorrect based on your interpretation of the terms of the contract

5. A Seller CAN put their home back on the market if there is an escrow dispute

6. If there is nothing in writing that the Purchaser has requested to cancel the contract, there could be ramifications for the Seller – they should contact an attorney before putting the home back on market

7. The current Title Company  may not be willing to close the new transaction however that doesn’t mean that another title company will not

8. Broker Holding Escrow

9. Notice to DBPR that there is Conflicting Demands w/in 15 days

10. Governed by DBPR: Broker Escrow Disbursement Order Requested OR Parties Mediate OR Parties Arbitrate w/ in 30 days

11. If the method above is not successful, a different settlement procedure must be chosen and DBPR notified

12. Other Options not Governed by DBPR: Lawsuit, Interpleader

13. Title Holding Escrow

14. Interpleader to be filed with the Clerk of Courts

15. Once title has been notified that there is a dispute over the earnest money deposit, they have the right to interplead the funds with the Clerk of the Courts for Circuit Court in your jurisdiction. Most Title Companies will send out a letter to all parties involved, putting them on notice that if the dispute is not resolved on their own within 14-days, we will turn the matter over to our outside counsel to file the interpleader action. Of course if the parties need more than 14-days to resolve the dispute, we will hold off filing suit for a reasonable period.

16. The costs of filing suit ($451), service of process (approximately $200) and attorney’s reasonable fees ($250-$500) are deducted from the disputed funds.  As you can see, the costs involved can easily exceed $1000. After the interpleader action is filed, the Title Company is dismissed from the litigation and the Buyer and Seller may continue to litigate over the funds.  Depending on how busy the court’s docket is, the litigation can take as long as 6 months to resolve.

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