Separate and apart from that contract section, there’s another section that addresses who will choose the closing agent.
These two roles — escrow agent and closing agent — are often filled by the same entity. However, that isn’t always the case, and it isn’t good to assume that the roles are interchangeable. By understanding the difference, you may be able to avoid potential issues later in the transaction.
For example, let’s say a buyer wants his attorney to hold the deposit, and he puts the attorney’s information in the appropriate escrow-agent spot on the contract. The seller, however, has indicated in the contract that he’ll choose the closing agent, and he picks a reputable local title company.
The contract says the deposit is due three days after the effective date, and the buyer sends the money to his attorney under deadline. The seller then contacts the title company to confirm the deposit, but he’s told the buyer’s money isn’t there. Upset, the seller contacts the buyer and asks where the funds are, and the buyer tells the seller that it was sent to his attorney — per the contract.
The seller is upset. He believed the money would be held by the title company he chose as the closing agent.
Is the buyer in default? Can the seller demand that the funds be placed immediately with the title company he selected? In short, the answer to both questions is no.
Of course, the buyer needs to make sure the deposit is sent to the closing agent an appropriate amount of time before the closing, but the buyer isn’t in default. If the seller wanted to have the money with his chosen closing agent, he should have changed the information in the escrow agent section of the contract since the two aren’t one and the same.
In addition, a seller that prefers to have the deposit held by his closing agent could ask his Realtor to say that in the listing and have it confirmed within the contract itself.
As always, carefully reading any contract can hopefully avoid confusion later.
Source: Meredith Caruso is Manager of Member Legal Communications for Florida Realtors
Looking to purchase a home? Contact Stateland Brown at 561-245-8722; www.statelandbrown.com. Stateland Brown is a Residential and Commercial Real Estate company located in Boca Raton, FL