A neutral third party who is typically a law firm, title company, or real estate brokerage company is entrusted to hold in escrow a buyer’s earnest money deposit until this money is either credited to the buyer at the closing of the transaction or is dispersed to either the buyer or seller if the transaction fails to close.  As an escrow agent, the neutral third party has a fiduciary responsibility to both parties in the transaction and is required to exercise reasonable skill and ordinary diligence in the maintenance of the escrow funds.

An escrow agent is required to keep funds in escrow until disbursement is properly authorized.  Proper authorization would consist of (a) the transaction closing and the escrowed funds being credited to the buyer, (b) written release of the escrowed funds signed by both parties to the transaction in the event the transaction fails to close, or (c) a court order directing the escrowed funds to be released to a specified party in the event the transaction fails to close.

Additional requirements may be imposed on the escrow agent depending on who is holding the funds in escrow.  For instance, a title insurance company is subject to the provisions of Florida Statute §626.8473 and is required to keep the funds in escrow until disbursement is properly authorized as set forth above.  A law firm acting in the capacity of a title agent is further regulated by the Florida Bar imposing strict ethical rules on the attorney regarding the holding and disbursement of escrowed funds.  In certain circumstances, a real estate brokerage company has reporting requirements imposed on them by the Florida Real Estate Commission and also has certain settlement procedures they must follow as set forth in Florida Statute §475.25(1)(d)(1).

In today’s residential real estate market, many escrow agents have disbursed escrowed funds to developers in connection with new construction transactions wherein the developer provides a “default certification letter” to the escrow agent pursuant to Florida Statutes §501.1375.  Simply receiving a default certification from the developer, however, is legally insufficient to trigger the lawful release of escrowed funds to the developer.  Pursuant to Florida law, a buyer must be afforded a judicial hearing which provides the buyer with the opportunity to present its evidence and argument as to whether a default occurred by either party and who is entitled to the escrowed funds as a result of this judicially determined default.  Absent a signed release by the parties, this hearing must precede the release of the escrowed funds by the escrow agent to any party.

If you are a buyer or seller who is involved in a residential escrow deposit dispute, it is recommended that the buyer or seller consult with a real estate attorney to provide legal guidance and take proper action to enforce your claim to the escrowed funds.

– Henry M. Cooper, Esq., handles the residential real estate practice of Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  He welcomes questions and comments regarding the above and can be reached at hcooper@boginmunns.com.

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement.

The purchase of your home may be the single largest investment that you will make in your lifetime.   At closing, you are given a deed to your home and you think – “Great, I own it.   As long as I pay my mortgage, taxes, contractors, and homeowner’s dues, no one can take it away from me.”   For the most part (at least in Florida), that is true.  But what do you do if someone does try to take your home away from you, claiming that you do not hold good title to the property?

The answer is to make a claim on your owner’s title insurance policy.   At closing, you will have (or at least should have) purchased an owner’s policy of title insurance that insures that you have “good title” to the home.  Depending on the policy terms, an owner’s title insurance policy may insure against all kinds of potential title problems, including:

• Title to the home being vested in someone else.   For example, suppose you buy your home from Sally Seller, who claims to be unmarried.   Several years go by, and at some point, you decide to either sell the home, or perhaps refinance your mortgage.  It is not until that time that you learn that Sally Seller lied at closing –  in truth, she was not unmarried and in fact legally owned the home with her husband, Sam Seller.  Since Sam didn’t sign the deed to you, he now claims he has an ownership interest in your home.    Your owner’s policy of title insurance may offer you coverage for this title problem.
• A defect, lien or encumbrance on your property.   Let’s go back to Sam and Sally Seller.   Suppose Sam and Sally Seller own the home encumbered by a mortgage from Big Bank.  You agree to buy the home, and you incur a purchase-money loan, secured by a mortgage, from Community Bank.  If all goes well, at the closing table, some of the funds from your loan from Community Bank will pay off the Sam and Sally Seller’s loan from Big Bank, and Big Bank will release its mortgage against your home.   Usually, this occurs.  But what if Big Bank (because it is so big) makes a mistake and applies the money paid at your closing to a different loan on a different property.   That leaves Big Bank’s mortgage still on your property.   The Sellers, thinking that their mortgage is satisfied, stop making their monthly mortgage payments to Big Bank.  Big Bank then files to foreclose its mortgage on your home!   Your owner’s policy of title insurance may offer you coverage for this title problem.
• Lack of access to your property.   Our now-famous couple, Sam and Sally Seller, own a home in the country, which you buy and move into.   You access this property by driving down a dirt road which runs off of the main highway.  You have noticed that there is a gate and fence at the entrance of the dirt road, but you think nothing of it and for some time, you use the dirt road to get to your home.  One day, you find the gate to the dirt road is now locked and you can’t get home.   You then learn that the dirt road is on property owned by Robbie Rancher, who has never granted an easement over his property to use the dirt road and he’s now decided he doesn’t want you driving up and down his dirt road to get to your home.  Your property is landlocked any without legal access.  Your owner’s policy of title insurance may offer you coverage for this title problem.

Like any other policy of insurance, an owner’s title insurance policy will contain exceptions and exclusions form coverage, and the examples above are not meant to provide an indication that coverage would, in fact, exist in any particular scenario.   However, these are real-life examples of claims I have handled when a title insurer has hired me to represent an insured owner.

Like any other policy of insurance, you may never need it.   However, if you do need title insurance, and a covered claim is made, an owner’s policy of title insurance is invaluable.   If the claim is covered under the policy, not only will the title insurer provide to you an attorney to defend your title to the property, the title insurer will also be obligated to either to “fix” the problem (if it can be fixed), or pay you the monetary losses you sustain in the event the problem cannot be fixed.

The purchase of an owner’s policy of title insurance is not required by law in Florida.   However, in my opinion, it is absolutely necessary that you protect your real estate investment through the purchase of title insurance.   Not only will you buy protection you may in the future need, you also buy some peace of mind in knowing that if a covered claim is made, the title insurance company will protect and defend your title to your home.  Don’t close on a purchase of a home without investing in an owner’s policy of title insurance.

– Nancy E. Brandt, Esq., manages the commercial litigation department of Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  She welcomes questions and comments regarding the above and can be reached at nancyb@boginmunns.com.

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement.

According to statistics released by the Florida Department of Highway Safety and Motor Vehicles, in 2008 there were 243,342 traffic crashes, involving 366,917 drivers.   Of those 243,342 traffic crashes, 212,119 involved some sort of injury, and 3112 involved a related fatality.  These statistics highlight the importance of having adequate insurance coverage available if you are injured by the fault of another in a motor vehicle collision.

You should understand that if you or a loved one is injured due to someone else’s negligence in a motor vehicle collision, Florida law – with very limited exceptions – does not require drivers or owners of motor vehicles to have bodily injury liability insurance.  Bodily injury liability insurance covers claims for death, permanent injury, significant scarring or disfigurement, or the significant and permanent loss of an important bodily function caused by the at-fault driver.

Florida law merely requires that owners of motor vehicles required to be registered in Florida maintain $10,000 in property damage liability insurance and $10,000 of personal injury protection insurance.  Neither of these insurance products covers bodily injury claims made by an injured person against the driver or owner of the motor vehicle that caused the injuries.  This is where an insurance product referred to as uninsured / underinsured motorist’s coverage can potentially fill the gap and provide a source of recovery for the injured person.

Uninsured / underinsured motorist’s coverage pays for claims made by you, certain family members, and other persons permissively operating or occupying your covered automobile when you or they are injured due to the fault of someone else. This type of insurance is purchased by you and is generally referred to as “UM.” UM coverage can come into play when the at-fault driver and / or owner have no, or inadequate, bodily injury insurance to cover your personal injury claim, or if the injuries arise from a “hit and run” incident.  As is the case with bodily injury liability insurance described above, UM will cover claims for death and serious permanent injury.

Unless your insurance company obtains from you a proper written rejection or limitation of coverage, Florida law requires that you be provided UM coverage equal to any bodily injury liability coverage you may purchase, and that the UM coverage be “stackable.”  Stackable coverage means that you may combine, or stack, the coverage limits for each automobile insured under your policy.  For example, if you purchased bodily injury liability coverage of $10,000 per person and $20,000 per occurrence, and had three automobiles covered under the policy, your combined available UM coverage would total $30,000 per person, and $60,000 per occurrence.

The importance of having adequate UM coverage cannot be emphasized enough.  Speak with your insurance agent today to determine if you are adequately covered.  In many cases, this insurance coverage could be your only source of monetary compensation if you are injured in a motor vehicle collision due to the fault of another.

Barry K. Baker, Esq., is an experienced personal injury attorney with Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  Mr. Baker works out of the Melbourne office of the firm and welcomes questions and comments regarding the above and can be reached at bbaker@boginmunns.com

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement. The engagement would also be confirmed by a written agreement.