Buying in Delray Beach and unsure how escrow actually works in Florida? You are not alone. Between earnest money, inspections, HOA documents, and insurance, there is a lot to track in a short window. In this guide, you will learn what escrow is, how your deposit is protected, the timelines to watch, and the local factors that can impact your path to closing. Let’s dive in.
What escrow is
Escrow is a neutral process that holds your earnest money while everyone works toward closing. It shows the seller you are serious and gives you a defined path to back out if a contingency is not met. If you close on time, the funds apply to your purchase. If you cancel properly within a contingency, your earnest money is usually refundable as set by the contract.
Who handles escrow
In Florida, a title company commonly acts as the escrow agent. Some contracts name an attorney or, in limited cases, a brokerage. The escrow agent holds your funds in a trust account, follows the written instructions in the contract, and disburses money at closing per the settlement statement. Your lender, if you have one, works in parallel to approve your loan but does not manage the escrow account.
Earnest money basics
- Typical amount: Many Florida buyers put down 1 to 5 percent of the purchase price as earnest money. In competitive moments, some buyers offer more to strengthen the offer.
- When you pay: Most contracts require you to deliver the deposit within a few business days of the effective date. The exact number of days is in the contract, so set reminders.
- Where it goes: The escrow agent deposits the funds into a trust account, then applies them at closing to your final costs. If you terminate on time under a contingency, the funds are typically returned to you.
Key contract timelines
Florida contracts rely on strict deadlines. Missing one can put your deposit at risk.
- Inspection period: Often 7 to 15 days after the effective date. You inspect the property and can ask for repairs, credits, or cancel within this window.
- Financing timeline: Lenders commonly need 30 to 45 days for approval. Your financing contingency spells out what happens if you do not receive approval in time.
- Appraisal timeline: Often runs with financing. If the appraisal comes in low, you can try to renegotiate, bring more cash, or cancel if your contingency allows.
- Title review: The title company issues a title commitment listing any defects. You have a set time to object and the seller has a chance to cure before closing.
- Closing date: Agreed in the contract. It can be extended by mutual agreement or under certain contingency language.
Always check whether your contract counts calendar or business days and what counts as delivered notice. Put every deadline in your calendar the day your offer is accepted.
Delray Beach factors to know
Delray Beach and greater Palm Beach County have a few dynamics that can affect escrow.
- Seasonality: Demand often increases from November through March, which can lead to tighter timelines and more competitive offers.
- Condos and HOAs: Many properties are in associations. Plan time to review budgets, reserves, and rules. Association response times can affect your schedule.
- Coastal insurance: Windstorm and flood risks can affect availability and cost of coverage. Lenders may require wind mitigation reports or elevation certificates before approving your loan.
Contingencies that protect you
Contingencies are your safety valves. If you terminate properly within these windows, your earnest money is usually refundable.
- Inspection contingency: Lets you inspect and request repairs. If you cancel on time per the contract, your deposit is typically returned.
- Financing contingency: Protects you if your loan is denied within the stated period.
- Appraisal contingency: If the home appraises below the price, you can renegotiate, bring cash, or cancel if allowed.
- Title contingency: If title defects are not resolved, you may be able to terminate and receive your deposit back.
- HOA and condo review: You typically have a period to review association documents, budgets, and any assessments.
- Survey and boundary: Significant encroachments or disputes may trigger termination rights.
- Insurance contingency: If you cannot secure required coverage, your contract may allow cancellation within the set timeline.
Title, insurance, and closing
The title company issues a title commitment that lists requirements to deliver clear title. The seller and title company work to clear items like liens or judgments. At closing, you receive an owner’s title insurance policy and your lender receives a policy for the mortgage. Separately, you will need to bind your homeowners, windstorm, and possibly flood policies in time for your lender’s final approval.
Real examples in Delray Beach
Example A - Competitive single-family offer
- A buyer offers a 3 percent earnest deposit, a 7-day inspection, and a 30-day financing contingency. The deposit is wired to the title company within 2 business days. The inspection reveals minor roof issues. The buyer negotiates a credit and closes on time.
Example B - Condo with HOA delays
- A buyer submits an offer with a 10-day HOA document review. The association takes longer to deliver documents. The contract allows for an extension tied to delivery. The parties agree to extend the review to keep the deal moving.
Example C - Appraisal and insurance challenges
- The appraisal comes in below the contract price. The buyer and seller renegotiate or the buyer brings additional funds. Separately, the insurer declines wind coverage due to property condition, so the buyer uses the insurance contingency to address coverage before proceeding.
Avoid these pitfalls
- Assuming your deposit is always refundable. It is only refundable per your contract and only if you act within the deadlines.
- Missing short windows. Inspection and notice periods can be as short as a week. Book inspectors as soon as you are under contract.
- Underestimating HOA timing. Associations need time to deliver budgets, rules, and financials.
- Delaying insurance quotes. Coastal coverage can be complex and affect financing.
- Not confirming wire details. Wire fraud is a real risk when sending deposits and closing funds.
Protect your deposit: checklist
- Read every deadline the day you go under contract. Note how days are counted.
- Send your earnest money on time and keep written confirmation of receipt and deposit.
- Schedule general, roof, HVAC, pest, and any specialized inspections immediately.
- Start your loan file right away and track appraisal and approval dates.
- Request HOA or condo documents as soon as possible and review them carefully.
- Verify title and escrow wiring instructions by calling a known phone number for the company before you send money.
- Get homeowners, windstorm, and flood quotes early. Share required reports with your lender.
- Keep a dated record of all notices and delivery receipts.
If a dispute happens
Sometimes buyers and sellers disagree about who should receive the earnest money. The escrow agent follows the written instructions in the contract. Common outcomes include a mutual release, following the dispute procedures in the contract, or the escrow agent depositing the funds with the court for a decision. Keep all notices and communications in writing and on time.
Wire safety tips
- Expect to verify by phone. Always call the title company using a trusted number before sending any wire.
- Ignore last-minute email changes. Treat surprise wiring updates as suspicious and verify.
- Confirm the final amount. Check figures before initiating the transfer.
- Use two-factor verification. Follow your bank’s security steps and confirm receipt quickly.
How Florida 360 Group helps
You deserve a process that feels controlled and predictable. Our team emphasizes disciplined timelines, early insurance and HOA checks, and clear escrow communication so you can avoid surprises. If you need speed or certainty, we can coordinate mortgage partners or explore an exclusive cash-offer solution that can shorten the path to closing.
Ready to navigate escrow with confidence in Delray Beach and across Palm Beach County? Connect with Thomas Pidgeon for a clear plan from offer to close.
FAQs
What is escrow in a Florida home purchase?
- Escrow is a neutral account where your earnest money is held while you complete inspections, financing, title, and other steps. Funds apply at closing or are returned if you cancel properly under a contingency.
How much earnest money do buyers put down in Delray Beach?
- Amounts vary, but many Florida buyers deposit 1 to 5 percent of the purchase price. Competitive situations may push deposits higher.
When do I have to deliver my earnest money?
- Most contracts require delivery within a few business days after the effective date. Your contract controls the exact timing, so verify the deadline and send funds early.
What contingencies protect my deposit in Florida?
- Common protections include inspection, financing, appraisal, title, HOA or condo review, survey, and insurance. If you terminate properly within these windows, your deposit is usually refundable.
How long does it take to close in Delray Beach?
- Cash purchases often close in about 7 to 21 days, while financed purchases commonly take 30 to 45 days, depending on lender, title, HOA timing, and insurance.
What happens if the seller and I disagree about the deposit?
- The escrow agent follows the contract. Disputes are often resolved by a mutual release, the contract’s dispute process, or by the escrow agent placing funds with the court for a decision.
Is escrow the same as the mortgage account for taxes and insurance?
- No. Purchase escrow holds your earnest money during the transaction. A mortgage escrow or impound account is set up by your lender after closing to collect taxes and insurance over time.
