Eric Feichthaler

Dear Mr. Feichthaler,

I have been negotiating with my neighbor to purchase his house. I moved in recently to the neighborhood, and would like to rent a house out next door.  We have reached an agreement, which includes a $10,000 escrow deposit.  I suggested this be held by an escrow agent (law firm, title company), but he insists on holding it himself. Is this an issue? I don’t want to offend him.

— Steven R.

Dear Steven,

I would not provide an escrow deposit directly to the seller. First, do you have a signed contract dictating the important terms, like price and closing date, as well as who will pay for the costs of the transaction?  Sellers typically pay for documentary stamps and the owners title insurance policy in Lee County, but anything can be negotiated.  Without a contract in writing, there are too many issues that can go wrong. It should  be noted that, to be valid, all real estate contracts must be in writing.

I would also ask if you have done your due diligence. You mentioned you recently moved to the neighborhood. Are you sure the person you are speaking to actually owns the house? It could be a tenant, squatter or relative of the owner. Your money could be gone in an instant. 

Transactions involving this level of money require caution, which is why an independent escrow agent (usually the law firm or title company handling the title work) is vital. They gather all items needed for the transaction, including the deed from the seller and funds from you.  Only when  all items are in place to give you free and clear title will the transfer actually take place. Therefore, I would never recommend a deposit be paid directly to a seller, unless there were very specific reasons to do so.

When speaking with your neighbor, you can suggest which firm you want to close the transaction, and that he should not be offended by the normal procedure in a real estate transaction.  If he is serious about selling to you, and he is the actual owner, I do not expect he will object to the standard procedure.

Eric P. Feichthaler has lived in Cape Coral for over 33 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Historical Museum, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 20 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.