Understanding Escrow in the Florida FAR/BAR Contract: What You Need to Know

When buying or selling a home in Florida, one term you’ll frequently hear is escrow. But what exactly is it, and why does it play such a crucial role in real estate transactions? In this blog, we’ll break down:

✅ What escrow is
✅ How it’s used in the Florida FAR/BAR contract
✅ Potential disputes and how to avoid them

Whether you’re a buyer or seller, understanding escrow can help you protect your investment and avoid costly mistakes.

What Is Escrow?

Escrow is a good faith deposit made by the buyer and held by a neutral third party, such as a title company or attorney, until the transaction is completed. This deposit shows that the buyer is serious about purchasing the property and is typically applied toward their down payment or closing costs at settlement.

Think of it as a financial safety net for both parties:
✔ For buyers, it secures their place in the deal.
✔ For sellers, it ensures the buyer has some skin in the game.

How Escrow Works in the Florida FAR/BAR Contract

In Florida real estate transactions, the FAR/BAR "As Is" Residential Contract for Sale and Purchase outlines the rules for escrow deposits. Here are the key details:

🔹 The buyer must deposit the escrow funds within the timeframe stated in the contract—often three days after the contract is signed, unless otherwise agreed upon.
🔹 The deposit is held in an escrow account until closing.
🔹 If the buyer fails to deposit escrow on time, the seller may have grounds to cancel the contract.

Missing deadlines or misunderstandings about escrow deposits can jeopardize the deal, so it’s essential to work closely with an experienced real estate agent and title company.

Escrow Disputes: What Can Go Wrong?

While escrow is meant to protect both buyers and sellers, disputes can arise when a deal falls through. Here are some common situations where escrow can become a point of contention:

❌ The buyer backs out for reasons not covered by contingencies (such as financing, inspection, or appraisal).
❌ The seller refuses to release escrow, claiming the buyer defaulted on the contract.
❌ Contract deadlines are missed, causing disagreements over who is entitled to the escrow deposit.

In these cases, escrow funds cannot be released unless both parties sign an agreement or a legal resolution is reached. To avoid disputes, buyers and sellers should:

✔ Understand all contract terms before signing.
✔ Keep communication clear and in writing.
✔ Meet all deadlines outlined in the contract.

Final Thoughts

Escrow is a vital part of the home-buying and selling process, but if not handled properly, it can lead to stressful and expensive disputes. Whether you’re a buyer or seller, working with a knowledgeable real estate agent can help ensure your escrow deposit is managed correctly and your transaction goes smoothly.

If you have questions about escrow or the Florida FAR/BAR contract, feel free to reach out! I’d love to help you navigate the process with confidence.