If the buyer defaults, who is entitled to escrow funds?

Study for the Florida Mutual Recognition Test. Use flashcards and multiple choice questions, each with hints and explanations. Prepare thoroughly for your exam!

Multiple Choice

If the buyer defaults, who is entitled to escrow funds?

Explanation:
Earnest money placed in escrow serves as a security for performance of the contract. When the buyer defaults, the contract often allows the seller to keep the earnest money as damages owed for the breach. At the same time, the broker may be entitled to a portion of that escrow as compensation for facilitating the deal, depending on what the purchase agreement says and applicable Florida law. So, the funds may be split between the seller and the broker, rather than going entirely to one party or being forfeited solely to the broker. The exact distribution depends on the contract terms and the governing rules.

Earnest money placed in escrow serves as a security for performance of the contract. When the buyer defaults, the contract often allows the seller to keep the earnest money as damages owed for the breach. At the same time, the broker may be entitled to a portion of that escrow as compensation for facilitating the deal, depending on what the purchase agreement says and applicable Florida law. So, the funds may be split between the seller and the broker, rather than going entirely to one party or being forfeited solely to the broker. The exact distribution depends on the contract terms and the governing rules.

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