Legal Tip: Escrow Disputes
Question: As the listing broker, I recently placed a property under agreement and became the escrow agent in the transaction. The transaction has fallen apart and both parties are demanding I turn over the sizable deposit to them. What are my responsibilities to the parties in this transaction?
Answer:. Escrow Disputes are an unfortunate byproduct to even the most successful real estate firms. The good news is that several years ago, at the urging of the Massachusetts Association of REALTORS®, the state legislature amended the General Laws to include a provision that protects escrow agents (the broker holding the funds) from being named as defendants in disputes between buyers and sellers where the accepted Offer or Purchase and Sales Agreement authorizes them to continue to hold the funds in the event of a dispute. Visit this website to view a copy of this statute. Most standard real estate contracts contain the necessary information in the escrow paragraph of the form, for example in the MASSFORMS™ Standard Purchase and Sale Agreement this language is contained in paragraph 4.
Provided by MAR Legal Department