Conflicting demands on escrowed funds: notice and settlement procedures

Florida escrow disputes

Custody does not establish entitlement. Under Fla. Stat. § 475.25(1)(d)1., conflicting demands for property still maintained in escrow or trust, or good faith doubt about entitlement, require the licensee to promptly notify the Commission and promptly employ a statutory settlement procedure. Rule 61J2-10.032 sets the deadlines: the broker must give the Commission written notification within 15 business days of the last party's demand, or after having a good faith doubt, and must institute one of the settlement procedures within 30 business days after the last demand or after having that doubt. Holding the money indefinitely is not a settlement procedure.

Four statutory choices

• Request a Commission escrow disbursement order determining entitlement.
• With the consent of all parties, submit the matter to arbitration.
• By interpleader or otherwise, seek adjudication by a court.
• With the written consent of all parties, submit the matter to mediation.

Mediation payment is as agreed to in writing by the parties. The department may conduct mediation or contract for mediation services. Mediation must be successfully completed within 90 days following the last demand; otherwise the licensee must promptly employ another statutory escape procedure. Merely starting mediation is insufficient.

Apply the rule

A buyer demanding a refund and a seller demanding the same deposit create conflicting demands. Good faith doubt can trigger the duties even without competing demands. The statutory protection against an administrative complaint for failure to account for, deliver, or maintain the escrowed property requires prompt use of a listed procedure and compliance with its resulting order or judgment.

Specific exceptions permit a return without notice or these procedures for an authorized written residential condominium cancellation or a buyer's good faith failure to satisfy the contract's financing clause. An ordinary change of mind does not establish either exception.

A broker's claimed commission does not itself confer ownership of the deposit. Identify the trigger, distinguish notice from settlement, and apply the consent and mediation requirements.