The Florida Association of Realtors and the Florida Bar Association have again collaborated on certain changes to the standard Residential Contract for Sale and Purchase used by Brokers throughout the State. Known as the FAR/BAR-1, the form has undergone a number of significant changes in an effort to incorporation many of the more attractive components of the currently approved FAR-9 form, as well as, the addition of new provisions which address issues which have arisen from the economic condition of the last several years.
One such notable change is the manner by which Deposits will be handled by the Escrow Agent. More specifically, Paragraph 2 of the agreement states that “the Initial Deposit to be held in escrow … subject to COLLECTION” instead of the previous requirement which was “Subject to CLEARANCE”. This is a new term of art which makes the agreement consistent with actual banking terminology found in the Federal Register which indicates that the funds are collected when they have been “actually and finally collected”. The change here results from an increasing likelihood that an Escrow or Closing Agent will find themselves in a situation in which funds which initially appear to be in place are subsequently determined to not be “good funds”.
The necessity of collected funds is again reinforced in the same paragraph where the agreement defines the funds which are necessary for the Buyer to bring to the closing. In this provision, the terms Official Check and Cashier’s Check have been removed. The clear intent is to place the parties on notice that if they intend to bring funds to the closing in a form other than a wire then the funds must be delivered to the Closing Agent in sufficient time to insure that the check will be “actually and totally” COLLECTED (10-14 days).
Needless to say, Closing Agents have become extremely anxious about the receipt of funds as the likelihood of Bank failures and fraud increase daily. For this reason, we recommend that you advise your client, in advance, to wire funds in all cases even if there is a small fee. It will save both you and your client a lot of stress and heartache in the run up to the closing.