What Is the Standard Escrow Deposit in Florida?

July 10, 2024

There are many ways to start a real estate process on a good note. Good communication between sellers and buyers is key, but they can also show their commitment through tangible means during the initial stages of the transaction. Commonly viewed as a gesture of good faith, the escrow deposit is one the main steps to follow on this end.

What Is an Escrow Deposit?

An escrow deposit refers to the money that buyers transfer at the start of the transaction, after the purchase offer has been approved. The money is placed in an escrow account and remains untouched until closing, with an escrow agent overseeing the funds in the meantime. If circumstances change and the money needs to be taken out of the account before schedule, both parties must provide written consent.

Also known as earnest money, escrow deposits are seen as a good faith gesture because they show the buyer's commitment to follow the contract terms. Once they've put a certain amount of money into the process, it's easier to assume that they're serious about purchasing the property.

How Does an Escrow Deposit Work in Florida?

Obviously, no one wants to give the wrong impression at such a crucial point, so how much are you expected to put on the escrow account?

Well, Florida's real estate transactions aren't bound to harsh restrictions on this end. In fact, buyers are already expected to pay a small amount, so the closest standard amount tends to be of about 5%-10% of the purchase price.

This is true across most counties, but you still need to remember that Florida has two of the most competitive real estate markets in the U.S., according to an article by Duckfund. Beyond that, the state offers a variety of opportunities for commercial and business operations.

Its location next to the Caribbean and its diverse population makes it appealing for both entrepreneurs and house hunters. All this to say, the demand is high, especially when compared to other parts of the country. With higher costs, there's more to pay for the escrow deposit and closing costs.

None of this will be a surprise to you if you're already planning to start a real estate transaction in Florida, and the support of a local title and escrow company can help you secure the best deal without any risks.

What Happens if the Transaction Falls Through?

This is a reasonable concern. Some issues are beyond the buyer's control, like hidden claims or unpaid taxes. Some of these issues might be unknown to the sellers, dating back to previous title transfers and revealed only after the title search.

You may also find structural problems during the initial appraisal and follow-up inspections. If these problems are severe enough to lower the value that was set for the property upon signing the contract, repairs can be made or you can opt out of the transaction.

All these possibilities should be addressed in the title contract to avoid a lengthy legal dispute. Your lawyer and real estate agent should review the contract beforehand to ensure that the repercussions are clear when specific clauses aren't met. This will ensure that the escrow money is delivered to the seller without delay if the seller fails/refuses to fulfill their part.

The 2017 Florida Association of Realtors/Florida Bar As-Is Residential Contract for Sale and Purchase (FAR/BAR) is the standard for Florida real estate transactions, but the terms can be modified as needed.

Protect Your Money and Peace of Mind

There's always some anxiety when it's time to make the earnest payment. It marks the beginning of a life-changing process and, as a buyer, you're trusting a third party with your hard-earned savings.

At Key Title & Escrow, we value that commitment and the trust of each of our clients. That's why we make sure to provide the best escrow services to protect your money and future. It's important to have the best support while drafting the escrow contract, and our specialists can always assist you so you don't have any lingering doubts while making your deposit.

Our title and escrow services are marked by excellence so you can be sure that all possibilities will be discussed in advance. Likewise, our staff will help you navigate the process after unforeseen changes; we strive to save you any stress and work hard to ensure that the negotiations never escalate into a conflict.

You don't need to worry about missing anything during the evaluation process. Key Title & Escrow helps you cover all your bases so your real estate transaction runs smoothly. We offer specialized escrow services like title searches, refinance transactions, insurance, and more, so you can check all the boxes in one place. Don't hesitate to call (305) 235-4571 or toll-free at (800) 547-0006. You can also send us a message via the contact form on this page and we'll get back to you in record time. Prepare for your purchase the right away and let Key Title & Escrow assist you through the process!