What Is Escrow In Florida Real Estate?

November 14, 2025

Ever wonder what really happens to your deposit after you sign a contract in Florida? When you are buying or selling in Fernandina Beach, every dollar and deadline matters, and escrow is where much of that work happens behind the scenes. If you understand escrow, you protect your funds, avoid delays, and close with confidence.

This guide explains escrow in Florida real estate in plain language. You will learn what escrow is, how it works locally in Nassau County, who holds your money, how contingencies affect your deposit, and how to guard against wire fraud. You will also get coastal-specific tips about insurance, taxes, and prorations so you can plan a smooth closing. Let’s dive in.

Escrow basics in Florida

Simple definition

Escrow is a neutral process where a third party holds funds and key documents until the conditions in your contract are met. The escrow agent follows written instructions and releases money only when the agreement says it is time. This protects both buyer and seller.

Two kinds of escrow you will see

Closing escrow: Used during the purchase. The escrow agent holds the buyer’s earnest money and other funds, coordinates documents, and disburses money when the sale closes.
Mortgage escrow, also called an impound account: Used after closing. A lender or servicer may collect a portion of your property taxes and insurance each month and pay those bills when due.

How escrow works in Nassau County

Step-by-step from offer to closing

You and the other party sign a purchase contract that names the escrow agent and describes how funds will be handled.
The buyer delivers earnest money to the named escrow agent on the timetable in the contract. Always request a dated receipt.
The escrow agent places funds into a trust or escrow account and confirms receipt in writing.
A title search is ordered and a title insurance commitment is issued. In Florida, a title company often serves as both title insurer and escrow or closing agent.
Contract contingencies are addressed. These may include inspections, appraisal, financing, and title review. Any issues are resolved or the parties follow the contract’s cancellation process.
When conditions are satisfied, closing occurs. The deed is signed, funds are disbursed according to the settlement statement, and keys are transferred. The deed is recorded with the county.

Who holds your funds locally

In Fernandina Beach and greater Nassau County, title companies commonly act as the escrow and closing agent. A closing attorney may also handle escrow. In more limited situations, a real estate brokerage’s trust account may hold deposits if the contract provides for it. After closing, a lender or loan servicer administers any mortgage escrow account.

What sits in escrow during closing

Earnest money and additional deposits
Down payment and closing funds
Payoff funds for existing mortgages or liens
Seller net proceeds
Keys, deed, and other title documents
Final settlement statements and written escrow instructions

Earnest money timeline at a glance

Every contract is different, but most Fernandina Beach closings run 30 to 60 days from acceptance. Here is a plain-language timeline to help you track what happens to your deposit.

Contract day: Your contract names the escrow agent and deposit amount, plus delivery deadline.
Deposit delivery: You send earnest money by wire or certified funds per the instructions. Keep a written receipt.
Inspection period: You complete inspections and negotiate repairs or credits. If the contract allows cancellation during this period and you properly cancel, your deposit may be refundable per the contract.
Appraisal and financing: The lender orders an appraisal and underwriting reviews your file. If the appraisal or financing contingency is not met and you cancel according to the contract, the deposit handling follows those terms.
Title commitment: Title issues, if any, are reviewed and resolved under the contract’s title provisions.
Closing disclosure review: You receive a settlement statement before closing. Review payoffs, prorations, and credits.
Closing day: Funds are disbursed according to the settlement statement, the deed is recorded, and escrow is closed.

Contingencies and your deposit

If inspections uncover issues

If your contract allows termination within an inspection period and you cancel within that window, you may be entitled to a return of your earnest money. If there is disagreement, the parties can pursue a mutual release or follow dispute resolution in the contract.

If the appraisal comes in low

A low appraisal can trigger negotiation, a price change, or contract cancellation if a financing or appraisal contingency applies. Deposit outcomes follow the contract’s written terms.

If financing falls through

When a financing contingency applies and the buyer properly cancels under that contingency, the contract often addresses deposit return. Always follow the notice and timing requirements in the contract.

If one side refuses to close

If a buyer or seller refuses to perform, the contract governs remedies. Outcomes may include a refund of the deposit, liquidated damages, specific performance, or another negotiated result. If the parties cannot agree, the escrow agent may require a mutual release, the parties may use mediation or arbitration if required, or the escrow agent may file an interpleader so a court can decide.

Closing costs, prorations, and coastal factors

In Nassau County, your settlement statement will show who pays what and how money moves at closing. The escrow or closing agent prepares this statement and disburses funds accordingly.

Property taxes: Taxes are prorated between buyer and seller as of the closing date. Nassau County tax amounts and millage impact your final numbers.
HOA or condo dues: Dues, assessments, and estoppel fees may apply and are typically prorated or paid off through escrow.
Municipal assessments or liens: Any city or county assessments are handled in the settlement statement.
Insurance in coastal areas: Lenders often require hazard, wind, or hurricane coverage. Flood insurance may be required. Premiums can be significant and may affect the initial funds you bring to close and, after closing, the monthly mortgage escrow payment if your loan includes an impound account.

Tip: Ask for a sample settlement statement several days in advance so you can confirm prorations, credits, and payoffs without last-minute surprises.

Protect your funds from wire fraud

Wire fraud targets real estate closings. Take simple steps to protect your deposit and closing funds.

Call before you wire: Always confirm wiring instructions by calling the title company or attorney at a phone number you already know, not one only found in an email.
Use written instructions: Request written escrow instructions on company letterhead and confirm the account name matches the escrow agent.
Verify a small test: If time allows, consider sending a small test wire and confirm receipt.
Watch email changes: Treat any last-minute change to wiring instructions as a red flag and verify by phone.
Prefer secure portals: Use the title company’s secure portal for document exchange when possible.
Keep receipts: Save your bank’s wire confirmation and the escrow agent’s receipt.

Documents to bring to closing

Use this quick checklist so your closing day is smooth.

Government-issued photo ID for all signers
Certified funds or proof of wire for closing amounts
Final homeowner’s insurance binder and flood policy if required
Any documents your lender or title company requested
Corporate or trust documents if you are buying or selling in an entity
Keys, remotes, and access codes if you are the seller

After closing: mortgage escrow explained

If your loan includes a mortgage escrow account, your servicer will collect a portion of your property taxes and insurance in each monthly payment and pay those bills when due. Federal rules under RESPA provide consumer protections, including annual escrow account statements and limits on the cushion a servicer can hold. Ask your servicer how flood or wind coverage is handled and how changes in premiums will affect your monthly payment.

Local best practices for Fernandina Beach

Confirm licensing and role: Know exactly who your escrow agent is and confirm the company is licensed in Florida.
Get receipts: Obtain a dated receipt for every deposit and keep copies of escrow and settlement statements.
Clarify insurance early: In coastal Nassau County, understand flood and wind requirements early so your initial funding and ongoing payments are clear.
Track taxes and dues: Confirm property tax status, HOA or condo dues, estoppel fees, and any municipal assessments well before closing.
Use secure wiring steps: Follow the verification steps above and never rely on email instructions alone.

Work with a trusted local advisor

A smooth escrow is the result of clear instructions, tight timelines, and careful review. When you work with a concierge-minded advisor who understands both numbers and design, you can move through each step with clarity. From reviewing settlement statements and coordinating with your title team to preparing a coastal insurance plan and managing vendors, you deserve proactive guidance that protects your funds and your time.

Ready to navigate escrow with confidence in Fernandina Beach? Schedule a complimentary consultation with Unknown Company to get a tailored plan for your next move.

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