TAX & LEGAL GUIDE

Escrow in Florida: How It Works for Home Sellers

Escrow is a neutral third-party arrangement where funds are held during a real estate transaction until all conditions are met and closing occurs. In Florida, escrow most often applies to the buyer's earnest money deposit. Understanding how Florida escrow works — who holds it, what triggers release, and dispute procedures — protects you as a seller.

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Who Holds Escrow in Florida?

In Florida, escrow funds are typically held by: the buyer's real estate broker (if using a real estate transaction), a licensed title company, or a real estate attorney. Florida law requires escrow holders to be licensed and to maintain escrow accounts separate from operating accounts. With a flat fee MLS listing, the buyer's agent's broker typically holds escrow — not your flat fee broker. At closing, the title company holds all final closing funds and disburses them to all parties at the same time.

Earnest Money Deposits: Amount and Timing

Florida earnest money is typically 1–3% of the purchase price. On a $425,000 home, expect $4,250–$12,750 in deposit. The deposit is submitted within 3 business days of the contract execution date (per FAR/BAR contract). It's held in escrow until closing, when it's applied toward the buyer's closing costs or down payment. If the deal closes, the deposit goes to the buyer. If the deal fails, who gets the deposit depends on why it failed and what contingencies were in the contract.

What Happens to Escrow if the Deal Falls Through?

If a buyer cancels during a contingency period (inspection, financing), the deposit is returned to the buyer per the contract terms. If a buyer cancels without a valid contingency (non-performance), the seller is typically entitled to the deposit as liquidated damages. In Florida, disputed escrow must follow specific procedures: if the escrow holder receives a written demand from one party, they have 30 days to resolve the dispute or must initiate legal proceedings, notify FREC, or submit to arbitration. The escrow holder cannot simply release funds without proper authorization from both parties or a court order.

FREQUENTLY ASKED QUESTIONS

Common Questions

Can the buyer get their deposit back in Florida if they change their mind?

Only if they cancel during a valid contingency period (inspection, financing, appraisal). If they cancel outside contingency periods without justification, they forfeit the deposit to the seller.

How long does escrow take in Florida?

The escrow period is the time between contract signing and closing — typically 30–45 days for financed buyers, 2–3 weeks for cash buyers. During this period, the deposit sits in escrow and is applied at closing.

What is FREC and how does it handle escrow disputes?

FREC is the Florida Real Estate Commission — the state agency that regulates real estate licensees. If an escrow dispute can't be resolved, the escrow holder (broker) can submit it to FREC for determination. Alternatively, parties can mediate, arbitrate, or litigate. FREC doesn't award funds — it determines who is entitled to them under the contract and law.

Is escrow the same as title company in Florida?

No — escrow is the arrangement; the title company is often who holds it. In Florida, the title company handles both escrow duties (holding funds) and the closing process (title search, insurance, document preparation, disbursement). They are often the same entity for Florida residential closings.

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