How many times do you see contracts with the Escrow Agent section blank or TBD inserted on the line for Escrow Agent? Do Buyers always make their deposit(s) by the Deposit Deadlines? This blog will address the Escrow Agent and Deposit Sections under the FR/BAR Residential Contract (the “Contract”) and assume the buyer’s agent is preparing the Contract. In addition, the blog will address the importance of a buyer making the deposit(s) by the deposit deadlines under the Contract and the procedure upon the agent receiving the deposit(s) from the buyer.
The agent must complete the Escrow Agent Section under Paragraph 2(a) of the Contract. If the Escrow Agent is a title company or an attorney, the agent must include the Escrow Agent’s name, address and telephone number pursuant to Rule 61J2-14.008(2)(b) of the Florida Administrative Code. You should never use TBD 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. Failure to complete this section, or inserting TBD, could be a violation of the aforesaid Rule.
If the Escrow Agent is the broker, the agent must deliver the deposit to his/her broker by the end of the next business day from receipt and the broker must deposit the check by the end of third business day from when the broker received it from his/her associate. Likewise, if a title company or an attorney is the Escrow Agent, the Escrow Agent must place the deposit into an escrow account no later than the end of the third business day following receipt of the item to be deposited.
When the Escrow Agent is a title company or an attorney and the Escrow Agent was not selected by Seller or Seller’s broker, the Buyer’s agent’s broker shall make written request within 10 business days after each deposit is due under the Contract to the Escrow Agent to provide written verification of receipt of the deposit. Within 10 business days of Buyer’s agent’s broker making such request, Buyer’s agent’s broker shall provide Seller’s broker with a copy of written verification if received or, if no verification received, written notice of same.
What happens if the Buyer doesn’t make the deposit by the deposit deadline under the Contract? Time is of the Essence under the Contract. Under Section 15 of the Contract, if Buyer fails to make payment of the Deposit, within the times specified, Seller may elect to recover and retain the Deposit(s). What if the Buyer made the Initial Deposit but didn’t make the Additional Deposit? Is Seller just entitled to recover the Initial Deposit for Buyer’s default? On Line 37 of the Contract, Deposit is defined as all deposits paid or agreed to be paid. Consequently, Seller may elect to recover from the Buyer the Initial Deposit paid and the Additional Deposit to be paid.
As always, if you have any questions concerning the foregoing, we urge you to consult with your real estate attorney.
Berlin Patten Ebling, PLLC
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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