In Florida, basically Real Estate Brokerages, attorneys, and / or title companies can legally hold an Escrow deposit (EMD) of a real estate transaction. This EMD is typically submitted with an offer or shortly thereafter. The real estate contract should state who / which company is holding the EMD and its contact information. Many if not most agents do not care about the legal structure of the entity holding EMD. Instead, these sales people follow their broker’s advice, bringing the affiliated title company (or attorney) into play. First reason, the broker is a shareholder there as well. Understandable.
Reason #2 is accountability or better non-accountability. The Florida Real Estate Commission (FREC) has a close eye on Escrow accounts held by RE Brokers. However, they have no jurisdiction when Escrow is held by title companies or attorneys. Therefore the majority of (especially franchised) brokerages are refusing to hold Escrow (EMD) in their name. Instead, they automatically “push” clients to use an affiliated title company or attorney to do what would be their job – if they acted in the best interest of their client.
Why having an RE brokerage hold Escrow money when an attorney can do it?
Let me explain: Any Escrow (EMD) deposit’s intention is to show seriousness for a purchase offer and it is submitted with (or close after) an offer is made. So at an early stage of any deal. Nobody knows each other. So be cautious! At this point, there are several contingencies in a typical real estate contract. Inspections, financing, repairs, and more. Great potential for dispute.
Once a deal breaks especially in those early stages, there may arise what is called “conflicting demands”. I.e. both parties want the EMD. Now what?
If no agreement between the parties can be found and the EMD is held by an attorney or title company we are stuck. Either one party moves or sues. Nothing will happen without giving either concessions or litigation.
If EMD is held by a licensed Florida Real Estate Brokerage, it is easy!
The FREC (FLORIDA REAL ESTATE COMMISSION) has put a nice vehicle into law. §475.25 F.S. gives licensed real estate brokers a simple and effective administrative procedure when it comes to conflicting demands regarding EMD. This procedure is called Escrow disbursement order (EDO). Arguments are sent to FREC and FREC decides. This procedure is without any fees to any of the parties. So any disputes can be resolved fairly and quickly without any courts or litigation.
Big Franchises ONLY limit their own liability, not yours, when asking to have attorney or title company hold EMD
But FREC (FLORIDA REAL ESTATE COMMISSION) only has jurisdiction about licensed real estate brokers. Not about title companies and not about attornies. So if your EMD is held with one of these, you are out of luck. FREC can not do anything for you.
These Escrow agents will typically only release Escrow if a written agreement is found between all parties to whom EMD shall be released. You can imagine, this to be difficult when you have conflicting demands between the parties.
For any client, if your broker refuses to hold EMD, he / she is refusing to do part of their work and act in your best interest.
Sea to Sky Realty is holding Escrow for our clients. Why? Because we feel it’s in the best interest of our client.
Our suggestions: One of the involved Real Estate Brokerages shall hold EMD. Period!
Don’t let anybody fool you. Real Estate Brokerages refusing to hold Escrow for their clients are obviously not providing the most beneficial service to their clients. They are putting their own interest ahead of yours.
Sea to Sky Realty
The Florida Real Estate Company with the GERMAN Twist!
Axel and Bea Weiss
Bradenton, Florida 34205
(941) 866 1666
www.bradentonbroker.com