Florida Adopts Escrow Disbursement Provisions
By Robert Harrison, J.D.
October 26, 2015
The escrow disbursement provisions adopted by the state of Florida requires any person disbursing escrow funds that are held as part of a real estate transaction, where at least one title policy is to be issued, to provide the parties to the transaction with certain information:
1. Certification statement in writing
Usually the disburser of the escrow funds is the settlement agent, who may be either the title insurance licensee or the licensee’s designee. The settlement agent must certify the truth of the following statement in writing, “I have reviewed the Closing Disclosure, the settlement statement, the lender’s closing instructions and any and all other forms relative to the escrow funds, including any disclosure of the Florida title insurance premiums being paid, and I agree to disburse the escrow funds in accordance with the terms of this transaction and Florida law.” This certification statement must be provided to all buyers, sellers, and lenders who are named in the transaction.
2. Names and license numbers
The names and license numbers of the title insurance agency issuing the title insurance policy, and the settlement agent responsible for disbursing the escrow funds, must be provided to the parties of the transaction before the funds are to be disbursed. If there is more than one title insurance agency involved in the transaction each of them should provide a separate form to the parties. Written approval must be given by all parties to the transaction authorizing the holding and disbursement of the escrow funds by the named title agency.
3. Cost comparison of the lender’s policy against an equivalent policy
When a Closing Disclosure form is completed by the lender and the title insurance policy purchased is a different cost than the premium calculated on the Closing Disclosure, the title insurance agency must provide the parties with a written comparison of the cost of the lender’s policy against an equivalent policy based on Florida premium rates. It is the responsibility of the title insurance agency to provide the parties with a written explanation regarding the true cost of the policy they are purchasing as well as showing the amount of premium that is to be paid by each party. All parties involved in the transaction must then authorize in writing that the premiums will be disbursed from escrow funds in accordance with the certification statement discussed above.
Any form/forms that make up the title insurance and escrow transaction must be completed, signed, and provided to buyers, sellers, and lenders. The title insurance agency must maintain copies of the completed and signed forms for 5 years. Form DFS-H1-2146 meets all the requirements of the new provisions.
These provisions are effective on October 28, 2015.
About the Author
Robert Harrison, J.D. is a Regulatory Compliance Consultant at Bankers Advisory. He is a graduate of Boston University and earned his Juris Doctor at the Boston University School of Law. Robert is admitted to the Bar in Massachusetts. He can be reached at robert.harrison@bankersadvisory.com
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