Dear Mr. Feichthaler:

I signed a contract to sell my home back in July, and last week was our closing date. The buyer had no contingencies in the contract, so it provides I get to keep the deposit if they don’t complete the purchase. The deposit was $2,000.

The escrow agent is telling me I cannot have the funds without the buyer agreeing. My Realtor and the title company have been unable to contact the buyers. Can’t the escrow agent just give us the money?

— Parker F.

Dear Parker:

With the recent uncertainty in the overall economy and our real estate market, we are seeing more buyers attempting to exit contracts. In your case, it doesn’t sound clear whether the buyer changed their mind, had a personal issue arise or some other matter. As always, we look to the contract for initial guidance.

The standard contract provides that, as you note, the seller is entitled to the escrow deposit if the buyer breaches the agreement. However, the escrow agent is not empowered to determine whether the buyer breached the contract, it has to be agreed to by the seller and buyer. Absent further instruction in the contract, the next step is to acquire a Cancellation and Release from the buyer, authorizing the escrow agent to release the funds. You have likely already attempted this, but if you have not, do so as soon as possible. There may be an opportunity for negotiation. I note your deposit amount is low if purchasing a home. The higher the deposit by the buyer, the more serious they tend to be in completing the purchase. I would demand a higher deposit from your next buyer.

I have advised my clients they can add a clause in the contract that provides for either nonrefundable escrow deposits, or deposits that can be released to the seller at the conclusion of the inspection period. With clear direction and authority, the escrow agent could release the funds in that situation. Buyers often do not like this type of clause, and those who are not serious about proceeding will not agree.

In your case, with the non-response of your buyer, your only option is for the title company to file an interpleader action, or for you to file an action in county court. For $2,000, you may determine it is not worth pursuing. You may also have the option to file a lawsuit against the buyer to compel them to purchase, under a demand for specific performance. At the very least, this process will take a very long time to resolve, and may not result in a successful sale.

In summary, before signing a contract, protect yourself the best you can with a substantial escrow deposit, clear language giving you the deposit if they fail to proceed and avoid unreasonable times for inspection and closing. Many sellers seek the advice of their attorney before signing a real estate contract, which for most of us is the largest financial decision made.

Eric P. Feichthaler has lived in Cape Coral for over 35 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 Museum of History, 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. He can be reached at eric@capecoralattorney.com, or 239-542-4733.

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.