SCR contract states that the parties will sign a disbursement agreement if a deal fails to close.
SCR310 Section 23 (D)
If either/both Parties default, Parties agree to sign an escrow deposit disbursement agreement or release agreement.
If there are brokerages that want their law firms to develop similar language, that is fine but that will not solve the issue when parties routinely refuse to sign a release and a lawsuit is required to disburse the earnest money held by a brokerage.
LLR says that brokers holding earnest money shall only disburse in one of two ways:
1. All the parties sign a disbursement agreement (e.g. SCR518, SCR517, mediation agreement).
or
2. A proper judge signs a disbursement order (e.g. magistrate interpleader lawsuit voluntarily filed by the broker holding the money, a lawsuit properly conducted by the parties).
One solution currently,
A lawyer holds the earnest money. At contract formation, lawyer, buyers, and sellers all sign an escrow agreement that states how the money is handled if the deal closes and if the deal fails to close (e.g. failed closing plus 30 days so the money shall be disbursed to the buyers unless the seller’s attorney serves a summons and complaint upon the lawyer escrow agent, after 2000 days the money shall be disbursed to the buyers or heirs/assigns)
Posted by : Byron King on 4/12/18 (This information is only accurate as of 4/12/18. You must contact SCR for updates and changes to this information after 4/12/18 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org)