Florida Real Estate Deposit Laws
Florida’s law specifies certain provisions governing real estate deposits.
A deposit is any money you put forward to affirm your will to pay for something in full. The amount and any restrictions on it are usually determined by the seller of the property in question. In real estate, deposits are generally required–and often non-refundable. Florida’s state law sets forth a number of regulations governing real estate deposits.
When you make an offer to purchase Florida real estate, you, as the buyer, will include an “earnest money” deposit. This deposit shows the seller that you’re serious about the offer to purchase their Florida property.
The amount of earnest money varies based on the type of property being purchased and local market conditions. A typical deposit might be 5-10% of the amount you offer in the purchase contract. The final amount is negotiable and will depend on such things as how long it will take you to close and the number and types of contingencies included in the contract.
The sales contract will dictate who holds the earnest money. Usually the seller’s agent will deposit the earnest money in a trust or escrow account until closing. At closing, the earnest money is applied to the total purchase price including closing costs. The trust or escrow account will be managed by an independent third party in most cases, e.g., a title company or real estate attorney who conducts closings. Earnest money deposits cannot be released if a transaction does not reach closing without the express consent of both the Buyer and the Seller.
In the event the sale does not close, the sales contract generally spells out the conditions under which you would forfeit the earnest money. Generally, if the seller meets all the terms of the contract, the seller will keep the earnest money. If the seller does not meet the terms of the contract, then you, as the buyer, receive a total refund of the earnest money. The best advice is to read your sales contract thoroughly and get your questions answered before you complete the offer. If you’re not satisfied with the explanation, seek professional legal counsel. A real estate purchase offer is a legally binding contract and you and the seller are bound by its terms and conditions.
Section 715.02 places an important regulation on real estate deposits–earnest money and otherwise. Specifically, it states that “no check, draft or other obligation of such prospective purchaser shall be construed to be a deposit if payment of said check, draft or obligation is refused through no fault of the seller.” In other words, if you write the seller a bad check, he tries to cash it and it bounces, you haven’t technically given him a deposit at all.
The state’s law also lays down specific rules regarding deposits placed on homes that are being built. Section 715.12 states that you may “withdraw all or any portion of the amount retained from progress payments’ made toward the build or, if someone else had previously commissioned the home’s construction, the owner. As your home is still being built, you can think of “progress payments” as a deposit toward its completion.
The law goes on to provide that the seller must pay you any interest earnings earned on your progress payments, if they’ve been placed in an interest-bearing account, within the first 30 days he receives them.