Escrow, Good-Faith Deposits, and Dispute Procedures
Holding and disbursing escrow money is a core broker responsibility in Florida, with strict timelines and defined dispute procedures. This chapter covers commingling, conflicting demands, and the four authorized settlement procedures.
Handling Escrow Funds
Escrow money must be placed in a separate escrow/trust account with a title company, attorney, or bank, generally by the end of the third business day after the sales associate receives it. Placing client escrow funds in the brokerage's own operating or personal account is commingling, which Florida prohibits, along with conversion of the funds. These are among the most serious escrow violations FREC pursues.
Conflicting Demands and Notice to FREC
When a broker faces conflicting demands, or has good-faith doubt about who is entitled to escrowed funds, Florida law requires written notice to FREC within 15 business days and, within 30 business days of the last demand, instituting one of the authorized settlement procedures. Unilaterally releasing disputed funds violates the law.
The Four Settlement Procedures
Florida recognizes four ways to resolve an escrow dispute: mediation, arbitration, an Escrow Disbursement Order (EDO) from FREC, and interpleader or litigation. An EDO is FREC's determination of who is entitled to the funds, and a broker who follows it in good faith is protected from liability. The broker acts as a neutral stakeholder throughout.