Posted by Nydia Streets of Streets Law in Florida Divorce
When parties agree to split the net proceeds from the sale of the marital home in a Florida divorce, what is defined as the net proceeds? Many times, the marital settlement agreement will define what the net proceeds are. Even still, many do not include information concerning escrow refund amounts disbursed months after the sale is complete. This was an issue in the case Flaim v. Flaim, 4D2024-2314 (Fla. 4th DCA July 9, 2025).
As part of their divorce, the parties entered a marital settlement agreement which provided in pertinent part:
The net sale proceeds (sale proceeds minus realtor commissions minus mortgage) shall be divided between the parties as follows: The Wife shall receive the first $60,000 of the sale proceeds. The remaining sale proceeds, if any, shall be divided equally between the parties. Should the home sell for less than $400,000, the Wife shall be entitled to all of the net proceeds (gross minus: mortgage, closing costs, realtor fees, credit to the Husband for expenses paid). The Husband shall not owe the Wife any additional funds.
The parties sold the home for $500,000 and the net proceeds received at that time were divided in accordance with the terms of the agreement. More than a year after the closing a check was issued by the mortgage lender for almost $5,000 which the escrow refund amount. The check was payable to both parties, but the former husband deposited the check into his own account and did not share the proceeds with the former wife. The former wife filed a motion to enforce the parties’ agreement, arguing “that the returned escrow funds would have been part of the net proceeds to be equally divided had the lender not waited to disburse.”
At a hearing on her motion, the former wife presented testimony from a board-certified real estate attorney who testified that “[T]he lender issued a check payable to both parties for $4,991.87 for payment of miscellaneous escrow funds, meaning property taxes and insurance. According to the witness, the escrow funds were, by definition, part of the mortgage payment. The witness concluded that because both parties paid the funds, they should split the credit.” Nonetheless, the trial court denied the former wife’s motion to enforce, holding “First, the tax escrow refund check in question is not by definition classified as net proceeds from the sale of the home. Second, the MSA states clearly that after each party receives what they agreed to at the time of closing that ‘[h]usband shall not owe the Wife any additional funds.’” The former wife appealed.
The appellate court reversed, noting that the former wife’s expert’s testimony was unrebutted. The court further held “The trial court also erred in concluding that the wife was not entitled to half of the escrow check because the MSA stated that the ‘Husband shall not owe the Wife any additional funds.’ However, this is not a case where the wife sought additional funds from the husband after closing. Rather, the wife merely sought what the MSA contemplated, that being an even split of net proceeds from the sale. Notably, the check was made payable to both parties. Under section 673.1101(4), Florida Statutes (2023): ‘If an instrument is payable to two or more persons not alternatively, it is payable to all of them and may be negotiated, discharged, or enforced only by all of them.’ Thus, the husband could not unilaterally endorse and deposit the check into his own account. As the wife’s expert witness testified, the check was made payable to both parties because they both contributed to the mortgage payments that led to the escrow balance. The provision in the MSA that the husband would not owe ‘any additional funds’ did not give him authority to take for himself additional funds that were payable to both parties.”
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