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Can Sellers Demand Closing Money Before Delivering Keys?

Money isn’t always disbursed instantaneously at closing, and occasionally a seller wants to see closing proceeds in their bank account before they’ll hand over the keys. Is the seller allowed to do this? If not, what can the buyer do about it?

It’s the day of closing. The buyer’s funds reached the closing agent’s account in time. All the documents are properly signed, witnessed, and notarized. The closing agent has reviewed all documents and sends a message to both sides confirming the transaction is closed.

The buyer has a moving van on its way and asks where to pick up the keys. But the seller replies, “You’re not getting the keys until I confirm my proceeds from the sale have been wired into my account.”

Can the seller do this?

Well, the first and most practical answer to this question is that they’ve already done it, so what is your next move, buyer?

If I were a buyer, I’d probably ask the closing agent when they plan to wire the funds. Many wire transfers happen shortly after closing, so it may just be a matter of waiting a short period of time, with no (or minimal) harm to the buyer.

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However, what if the closing agent confirms the deal is closed, but they won’t be able to wire funds to the seller for a few days? And what if, when the seller hears this news, they refuse to budge on their “wire for keys” stance. In that case, the buyer and seller should orient themselves on the contract to see where they stand. Let’s look at a couple of provisions in the Florida Realtors/Florida Bar “AS IS” Residential Contract for Sale and Purchase. These provisions are identical to the version that is not AS IS.

First, what does the contract say about the seller’s delivery of keys to the buyer? Section 6(a) provides “Also, at Closing, Seller shall have removed all personal items and trash from the Property and shall deliver all keys, garage door openers, access devices and codes, as applicable to Buyer.”

So, the seller is obligated by the contract to deliver all keys, access devices and codes no later than closing.

Second, when is closing? Section 4 provides that “Unless modified by other provisions of this Contract, the closing of this transaction shall occur … (“Closing”) on [insert date] (“Closing Date”), at the time established by the Closing Agent.” Based on this sentence, the parties know what the closing date is, but it’s up to the closing agent to inform them of the precise moment when the closing occurs on that date. That is the seller’s deadline to deliver the keys to the buyer.

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Note that the seller doesn’t get to dictate what time closing occurs – that’s the job of the closing agent. Also note the closing agent’s perspective. Does the closing agent wire funds to seller before closing has occurred? No, that would be premature and highly risky, just in case a last-minute issue arises. Delivery of funds to all necessary parties (including the seller) and recording of documents typically occurs after closing.

Back to our scenario – the transaction closed. The seller is holding firm to a “wire for keys” position and is unmoved by the buyer’s protest. Now the buyer could potentially hold the seller liable for any harm that occurs due to the delay. Will there be costs incurred for temporary lodging, temporary storage of personal property, or rescheduled delivery dates? If so, those expenditures, which the buyer wouldn’t have incurred if the seller had delivered the keys on time, could become the focus of a potential legal dispute in the future.

Note that if these costs are low or nonexistent, like if it’s an investment property where the buyer doesn’t need to access the property for a few weeks, it’s possible that the buyer doesn’t have a case worth pursuing. In that scenario, a hostile demand for keys may not be a good idea.

If, on the other hand, the buyer stands to lose substantial money based on the delay, the buyer could alert the seller about their potential liability if the seller doesn’t deliver keys. Setting the right tone for this discussion is a strategic decision, though, which should be left to the buyer or seller. After all, they’re the ones who live with the consequences if the flow of conversation stops and liabilities start accruing.

This discussion has focused on buyers and seller so far, but there’s one final perspective to keep in mind: Realtors should avoid advising buyers or sellers about legal matters.

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If you’re able to convince both sides to iron out this issue one way or another before the buyer starts incurring costs (regardless of who is “right”), that’s a successful resolution. But if the situation deteriorates, members could face liability for potential missteps they take along the way.

In other words, the sooner buyers and sellers take charge of their own legal matters and dictate the tone, the safer a member will be.

Joel Maxson is Associate General Counsel for Florida Realtors

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