What Happens To Unused Escrow?

October 10, 2024

In broad strokes, escrow is the key element that holds all parts of a real estate transaction. It encapsulates many steps and a continuous negotiation process to ensure that all parties are on the same page. The escrow funds are probably the most well-known part of the process, even if you're not familiar with real estate transactions. This is the money that's deposited at the start of said transaction and remains unused until the closing date.

Understanding Escrow

The creation of the escrow account is preceded by negotiations where buyers and sellers agree to fulfill specific obligations. These talks also outline the closing expenses and the amount that buyers are expected to transfer for the earnest money.

This initial communication is vital to guaranteeing a smooth process because it fosters communication and shows everyone's commitment to achieve a successful closing. All parties must be clear on their legal obligations and the penalties they might face if the conditions aren't met.


The result of the negotiation should be conveyed clearly in the escrow agreement, from the clauses outlining the obligations to the timeline leading up to the closing. Last but not least, the escrow agreement details the procedures to release the escrow funds, what to do with these funds during a dispute, and what happens to unused escrow funds.

The Escrow Account

The escrow account is created after all parties have reached an agreement and signed the contract to prove it. It represents the first tangible proof of the transaction, so it carries a lot of weight. It holds the buyer's earnest payment, and other amounts corresponding to multiple closing costs.

The buyer deposits the agreed-upon sum in the escrow account, usually via wire transfer or online payment platforms. Check deposits are also allowed, but they've become less common with the development of digital payment systems.

Releasing Escrow Funds: What Happens to Unused Escrow?

In this case, the most logical answer is also correct. Unused escrow funds are refunded to the person who made the deposit. The exception would come from disputes regarding the allocation of the funds and interest; in which case, the first step is to check the escrow agreement to see the clauses pertaining to that specific scenario.

As we already mentioned, the release of escrow funds depends entirely on the ability to complete all the clauses on the agreement without delay. Both seller and buyer need to do their part to meet the deadline without any loose ends, and this can be tricky if there are pending repairs on the property, issues to address in a faulty title, etc.

The escrow agent is the neutral third party holding the funds in the escrow account until that point. They take care of verifying that all conditions have been fulfilled before releasing the escrow as per what's stated in the contract.

• If there are any disputes, the escrow agent must hold the funds until all parties reach an agreement.


• If the escrow agent is a licensed Florida broker, they also make the decision to take the case to court if they observe any discrepancy. The funds can only remain in the escrow account for a limited period, so a court process is sometimes the only way to solve a dispute.

Resolving Disputes

>The professionalism of the escrow agent does a lot for the clients' peace of mind during the resolution of disputes. Sellers and buyers are given a timeline to resolve the conflict with the mediation of a neutral third-party.

Said timeline could be of 10-30 days, depending on the type of contract that was used for the transaction. In Florida, the Florida Association of Realtors (FAR) contract or the Florida Association of Realtors/Florida Bar (FAR/BAR). If you're working with the later, there's no mediation period needed before the agent submits the case to court.

Ensure a Safe Process and the Accurate Release of Escrow Funds

The main purpose of escrow is to protect both buyers and sellers so that their time and money aren't spent in vain. That's why Key Title & Escrow provides all the services you need to go about the process. We're ready to ensure that everything moves quickly after the earnest payment is done, and you can count on our professional team to oversee each stage of the process so you're not met with an unpleasant surprise when it's time to release the escrow funds.

Our title and escrow company guarantees that all the unused escrow is refunded in accordance to the contract, on top of verifying that all closing payments are accurate. This way, you don't have to stress over anything during the closing process and enjoy the outcome: a successful title transfer and all the expenses being accounted for without any discrepancies.

Protect your investment and get the most satisfying outcome during your real estate transaction. The specialists at Key Title & Escrow are ready to help you navigate the process, providing timely services and doing due diligence at all times. Your escrow funds will be in the best hands, and you'll have the best support system to mitigate potential disputes. You can call (305) 235-4571 or toll-free at (800) 547-0006 to learn more. Or feel free to contact us via the contact form on this page to get more information and in-depth answers to any of your questions.