ORLANDO, Fla. – In completing one of the Florida Realtors contracts, there are spaces for the escrow agent’s information, including name, address, and telephone number. Not only is this information required per 61J2 14.008(2)(b) of the Florida Administrative Code, aka your FREC rules, but it lets the buyer know where to place the deposit once due under the contract.
Separate and apart from that section of a contract, there is another section that addresses who chooses the closing agent.
The key: These are two separate roles.
Pragmatically, however, the same entity often performs both functions – and that’s why the escrow vs. closing agent issue becomes confusing – and an assumption those roles are interchangeable isn’t a good one.
An example of what can go wrong
Let’s say the buyer wants his attorney to hold the deposit and has put the attorney’s information in the appropriate escrow-agent spot in the contract. The seller wants to choose the closing agent and has checked the corresponding box for him to do so.
The contract says the deposit is due three days after the effective date, and the buyer sends the money to his attorney as specified in the contract. The seller, however, contacts the title company to confirm the deposit and is told that the buyer’s money isn’t there. The upset seller contacts the buyer and asks where the funds are. The buyer tells the seller that they were sent to his attorney, per the contract.
The seller is upset. He believes the money should be with the title company he chose as the closing agent. Is the buyer in default? Can the seller demand the funds be placed immediately with the title company?
In short, the answer to both questions is no. Of course, the buyer needs to make sure the deposit is sent to the closing agent in an appropriate amount of time before closing, but the buyer isn’t in default. If the seller wanted to have the money with his chosen closing agent, he should have changed the information in the escrow agent section of the contract since the two are not one and the same.
As always, careful reading of any contract can often avoid confusion later.
For more information on confirming that an escrow deposit has been received, see “Agents Must Send Copies of Escrow Checks – Right?” in the July 17, 2019, issue of Florida Realtors Legal News.
Meredith Caruso is Associate General Counsel for Florida Realtors
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