LitigationReal Estate LawZinnLaw, contract attorney, Fort Myers, FL

The ways in which Real Estate contract disputes are typically resolved

When it comes to real estate contract disputes, one of the keys to the way they are resolved lies in whom the escrow agent is (this is the party who holds the down payment or initial funds for the transaction). Here in Southwest Florida, there is almost no restriction as to who is allowed to hold the escrow. The escrow agency could be the title company, the licensed Florida real estate broker or a lawyer, or it could even be another party or entity.

If the escrow agent is the same entity as the title company, the lawyer or anyone other than a licensed real estate broker, the dispute must be handled as a civil matter to start. The dispute resolution section of the Florida As-Is contract specifies 10 days for the seller and the buyer to attempt to resolve the dispute on their own. If that is not successful, the parties are required by contract to submit the dispute to mediation. Mediation is a method of dispute resolution where a neutral third party works with the parties involved in the contract dispute and helps reach a solution that is mutually agreeable to all parties involved.

The next logical step may be arbitration. The parties involved in the contract submit their dispute to an arbitrator, who makes a ruling on the issue. Arbitrators are not officers of the court. If binding arbitration is the chosen method, parties are bound by the ruling of the arbitrator and rarely have the option for the court to review the decision.

The issue becomes a legal matter if the two parties cannot agree on how to handle the escrow deposit even having used both of these methods. Mediation is often just the first step of a small claims process. Small claims court exists to hear legal matters where there is a dispute between parties over a financial amount less than a set figure. Each state has its own rules about small claims court cases. In Florida, small claims court can hear cases where the amount involved is $8,000 or less.

This is ultimately what happens when anyone other than the real estate broker is the escrow agent.

If the escrow agent in your dispute case is a licensed Florida real estate broker, that’s actually a whole other story, because Florida law comes into play immediately then. The broker acting as the escrow agent will submit the dispute to the Florida Real Estate Commission (FREC). Florida Statute 475.25 (1) (d) states that if a broker “in good faith, entertains doubt as to what person is entitled to the accounting and delivery of the escrowed property, or if conflicting demands have been made upon the licensee for the escrowed property, which property she or he still maintains in his or her escrow or trust account, the licensee shall quickly inform the commission of any doubts or conflicting demands and will then:

  1. Request of the commission an escrow disbursement order naming who has the right to the escrowed property;
  2. With the consent of all involved parties, have the matter turned over to arbitration;
  3. Then by interpleader or claim, seek adjudication for the matter by a court of law; or
  4. With the written consent of all involved parties, have the matter turned over to mediation. The department may choose to conduct mediation or it may also contract with public or private entities for other mediation resources. The mediation process must be completed within ninety days following the last demand, or the licensee shall then have to quickly employ one of the other escape procedures that’s within this section. The payment for the mediation will be as it is agreed to by the parties in writing.”

When the broker acting as an escrow agent in the case submits the dispute to FREC they will fill out the paperwork and request statements from the seller and the buyer regarding the dispute. FREC will then deliberate and either award the deposit to one party or declare it is unable to determine and advise the broker, so they will tell the broker to take the dispute to an interpleader. An interpleader is defined as the escrow holder files suit asking the court to determine which party has legal rights to those funds.

Buying a home is the biggest financial investment you’re likely to make in your entire life. If you think you have the grounds to file a dispute or you’re in the midst of one, you should contact an attorney who is qualified in real estate law like the professional and experienced attorneys at ZinnLaw. Just give us a call at (239) 418-5129 – that’s (239) I-1 U- LAW – to schedule a complimentary consultation at one of ZinnLaw’s offices in either Fort Myers or Naples.