What Florida Real Estate for Canadians Need to Know about Earnest Money Deposits

For Florida real estate for Canadians, having the correct knowledge about the laws and guidelines that govern earnest money deposits in Florida is very essential in their real estate investment ventures. If you are purchasing real estate property, it is pretty standard that you need to put down what is called an “earnest money” deposit. This is basically the amount of money that the buyer puts up in order to show genuine interest on the property while still awaiting the final closing details of the purchase agreement. This money is kept until the deal is finalized and is included in the final price as well as any closing costs. However, if the deal does not push through, the money is not released until both the seller as well as the buyer agrees. It is only important for Canadians to know what their rights are under Florida law when it comes to this aspect of the real estate transaction.

Where is the Earnest Money Deposited?

For Canadians purchasing US real estate, it is important to note that the sales contract will determine who actually will hold the earnest money. If we go by industry standards, it is usually the real estate agent of the property seller who will be entrusted to hold on to the earnest money. He or she will put the money in escrow or a trust until such time that the seller and buyer come to terms with the final details of the transaction. An uninterested party to the transaction, usually a title firm, manages this escrow or trust. However, the escrow holder possesses negotiation rights between the involved parties. Under the Florida Administrative Code, a broker is given permission to put escrow funds in an account that earns interest, but only with the expressed written authorization of the people involved in the sale. Real estate brokers are mandated by law to transfer the money quickly upon receipt of deposit from a possible buyer. The broker must deposit these funds into escrow no later than three business days as mandated by the code.

What Happens if there are Conflicts?

If, for some reason, the real estate deal does not push through as mentioned above, both the buyer and seller must give their consent for the money to be released. As a rule, the prospective buyer is the one entitled to refund the amount. However, the seller has the right to keep the funds if the prospective buyer did not comply with the time allotted for the contract terms. If there is a dispute, both seller and buyer may be entitled to the funds. The responsibility falls to the title company to resolve the issue on who should receive the money. Based on Florida law, a seller can proceed to offer the property to other prospective buyers and finish the sale even if there is still an escrow that has not been resolved.

The Florida Statutes

According to Florida Statute 475.25, the broker is instructed to return the escrow money at the agreed upon time or as mandated by law. However, if the broker in good faith suspects that the person receiving it is no longer entitled to the money, he can inform the Florida Real Estate Commission and can request for an order to determine who owns the funds in escrow or seek legal judgment from a Florida court. If it is for arbitration with the authorization of all involved, he can file for a mediation process that needs to be completed within ninety days.

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