Real estate transactions in Boca Raton—and across Florida—are often fast-paced, high-stakes affairs. Whether you’re buying your dream home or investing in rental property, one common thread in nearly every deal is the escrow deposit (also called an earnest money deposit). But what happens if the deal falls apart? Can you get your deposit back?
The answer depends on several factors, including the terms of the “AS IS” Residential Contract for Sale and Purchase, how contingencies were handled, and whether both parties agree on the outcome. If not, the matter may end up in interpleader litigation, tying up your funds for months.
Let’s break down the rules, your options, and how to protect your rights if your Boca Raton real estate deal doesn’t make it to closing.
Understanding the Escrow Deposit in Florida Real Estate
In most Florida real estate deals, buyers are required to submit an escrow deposit shortly after signing the contract—typically 10% to 20% of the purchase price. This money is held by a neutral third party known as the escrow agent, often a title company or real estate attorney.
The purpose of the escrow deposit is to show the buyer’s good faith and to provide some protection to the seller in case the buyer defaults. But the deposit doesn’t automatically belong to the seller if the deal falls through. Whether it gets refunded depends on the contract contingencies and who (if anyone) breached the agreement.
The Florida “AS IS” Residential Contract: Key Contingencies
Most residential transactions in Boca Raton use the Florida Realtors/Florida Bar “AS IS” Residential Contract for Sale and Purchase. This standard form includes several built-in contingencies that allow buyers to cancel the contract under certain conditions—and recover their deposit.
Financing Contingency
If the buyer is obtaining a mortgage, the contract usually includes a financing contingency that allows them to cancel the deal (and get their deposit back) if they’re unable to secure loan approval within the agreed time frame (typically 30 days).
Important: The buyer must timely notify the seller and escrow agent that financing was not approved. Failing to do so may waive the contingency.
Inspection Period (Due Diligence)
The “AS IS” contract allows the buyer an inspection period (usually 15 days) to conduct any and all inspections of the property. During this time, the buyer can:
- Inspect the home’s structure, roof, plumbing, electrical, HVAC, and more
- Review permits and code violations
- Back out of the contract for any reason, so long as it’s within the inspection window
If the buyer cancels in writing before the inspection period ends, the deposit is usually refunded.
Appraisal Contingency (Optional)
Some contracts include an appraisal contingency, especially when financing is involved. If the property appraises for less than the contract price, the buyer may cancel the deal or request a price reduction. If no agreement is reached, the buyer may walk away with their deposit.
Role of the Escrow Agent
The escrow agent is a neutral third party who holds the deposit and disburses it only when:
- The deal closes and the money is applied to the purchase price
- Both parties sign a Mutual Release and Cancellation
- A court order directs the release of funds (e.g., via an interpleader action)
Escrow agents are not allowed to unilaterally decide who gets the deposit in a dispute. If the buyer and seller disagree, the escrow agent must hold the funds until resolution.
What Happens If There’s a Dispute Over the Escrow Deposit?
If the buyer believes they are entitled to a refund (e.g., due to failed financing or an issue discovered during inspection), but the seller refuses to sign a release, things can get complicated.
Step 1: Attempt a Mutual Release
Both parties may try to negotiate a Mutual Release and Cancellation of Contract. If an agreement is reached, the escrow agent will disburse the funds accordingly.
Step 2: Escrow Agent Issues a Demand Letter
Florida law allows escrow agents to issue a written demand to both parties. If no objection is received within 15 days, the escrow agent may release the funds to the party who made the claim.
Note: This is risky. If the other party objects, the escrow agent is often required to file a legal action.
Step 3: Interpleader Action
If both sides maintain conflicting claims and no resolution is reached, the escrow agent may file an interpleader action in court. This is a lawsuit in which:
- The escrow agent deposits the funds with the court
- The buyer and seller are named as defendants
- The court decides who is entitled to the funds
The downside? Legal fees and delays. The losing party may also be ordered to pay the escrow agent’s attorney’s fees and court costs.
Practical Tips to Protect Your Escrow Deposit
Understand All Contingency Deadlines – Mark key deadlines on your calendar and respond in writing before they expire. Courts and agents won’t honor verbal conversations or “handshake deals.”
Keep Communication in Writing – All contract cancellations, extensions, and inspection objections should be documented in writing—preferably via email or formal notices submitted through your real estate agent.
Read the Contract Carefully – Don’t assume all contingencies are built-in. Some may be removed, customized, or waived. Know what you’re agreeing to before signing.
Work With a Real Estate Attorney – In a competitive market like Boca Raton, real estate agents often rush deals. A Florida real estate attorney can:
- Review your contract for protective language
- Help you draft cancellation notices
- Represent you in an escrow deposit dispute or interpleader action
Frequently Asked Questions (FAQs)
Can I get my escrow deposit back if I changed my mind?
If you’re still within the inspection period, yes—you can cancel for any reason. After that, it depends on the contingencies and the seller’s willingness to release the funds.
How long does it take to get my deposit back?
If both parties agree, it may take just a few days. If there’s a dispute, it could take weeks or even months—especially if an interpleader action is filed.
What if the seller breached the contract?
If the seller refused to close or failed to meet a contractual obligation, the buyer may be entitled to full deposit refund and possibly pursueadditional legal remedies.
Conclusion: Know Your Rights Before You Sign
In Florida real estate deals—especially in competitive areas like Boca Raton—time is of the essence, and misunderstandings over escrow deposits can lead to costly disputes. While the “AS IS” contract offers multiple protections for buyers, exercising those rights properly is key to securing a refund.
If your real estate deal fell through and you’re unsure of your rights, don’t try to navigate it alone. An experienced real estate attorney can protect your interests, negotiate on your behalf, and represent you if an escrow dispute escalates to litigation.
