What Is Earnest Money Dispute Resolution?
Earnest money dispute resolution refers to the legal process of determining who is entitled to an earnest money deposit when a Florida real estate transaction fails to close and the buyer and seller both claim the funds. Florida law and the standard FAR/BAR contract provide several structured resolution paths.
Resolution Methods Under Florida Law
- Mutual Release: Both parties agree in writing to release the deposit to one party or split it. This is the fastest and most cost-effective resolution.
- Mediation: Required under most FAR/BAR contracts. A neutral mediator helps the parties negotiate a settlement. If mediation fails, the parties may proceed to other remedies.
- FREC Escrow Disbursement Order: Under Section 475.25, Florida Statutes, a real estate broker holding disputed earnest money may request the Florida Real Estate Commission to determine who receives the deposit.
- Interpleader Action: The escrow holder files a lawsuit in circuit court, deposits the funds with the court, and asks a judge to decide.
- Litigation: Either party files a breach of contract claim seeking the deposit plus potential damages.
FREC Notification Requirements
Under Section 475.25(1)(d), Florida Statutes, a broker holding disputed earnest money must notify FREC within 15 business days of the dispute arising. The broker then has 30 days to choose a resolution method: submit to FREC, initiate an interpleader, or comply with the escrow agreement terms.
Attorney Fee Recovery
The FAR/BAR contract includes a prevailing party attorney fee provision. The party who wins the dispute may recover their reasonable attorney fees and costs from the losing party. This makes the cost-benefit analysis an important part of any dispute strategy.
Related Terms
- Earnest Money Deposit — The funds at issue in the dispute
- Escrow — Where disputed funds are held pending resolution
- Liquidated Damages — The contractual framework for deposit forfeiture
Barnes Walker Dispute Resolution
Barnes Walker's real estate attorneys represent buyers and sellers in earnest money disputes throughout Southwest Florida, from initial demand letters through mediation and circuit court litigation. Request a legal inquiry for assistance.
Florida Law Reference
Fla. Stat. § 475.25
Florida law requires real estate brokers to maintain escrow accounts for deposits and establishes dispute resolution procedures when buyer and seller disagree over earnest money.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC