When a Principal Broker ( hereinafter called “Broker” ), has acted to represent one or both parties in a real estate transaction. In the course of the transaction the buyer has given the Broker earnest money to deposit in the Firm’s escrow account. For some reason or another, the deal falls through. The buyer is now demanding that his earnest money be returned by the Broker and at the same time, the seller is demanding the earnest money be forwarded to him. The Broker is now in the middle of this situation and in a quandary as to what to do. If the money is disbursed to the wrong party then there may be liability on the part of the Broker to pay the other party if a court determines that the other party is entitled to the money.
The Interpleader Form for Knox County Session Court will enable a Broker holding earnest money deposits in dispute, to get out of the middle of the dispute and eliminate his legal exposure to either party by securing the assistance of the Knox County General Sessions Court to resolve the dispute between the buyer and seller.
The Broker holding a disputed deposit in escrow should file the Interpleader Form and a copy of the real estate sales contract together with the filing fee at the General Sessions ( Civil Sessions ) Court Clerk's office in the City-County Building on Main Avenue. The original of the Interpleader Form plus one copy for each defendant is filed with the General Sessions Court Clerk ( 5 copies ). The Clerk's staff will issue a summons to both the buyer and the seller and the Sheriff will assign a court date and time indicating when the trial will be held. The Sheriff will then serve the summonses on the buyer and the seller commanding them to appear on that date. The Sheriff should notify the Broker when to attend the trial in the event the Judge has questions regarding the dispute, but if he fails to do so within one week, the Broker should contact the Clerk's Office.
The Broker must pay a filing fee when the Form is filed with the General Sessions Court. The fees are $174.50 for two parties, add $22.50 for each additional party. (updated 12/08) A check for the fee should be made payable to "General Sessions Court”. The fee may vary especially if the buyer and/or seller reside in different counties or out of state. These filing fees will be taxed as costs to the losing party and should be reimbursed to the Broker. These fees should be verified with the Court. However, reimbursement is not automatic. The Broker must request reimbursement of the filing fees.
The Broker must deposit the disputed earnest money with the court.
The Interpleader Form to be filed with the Court should be completed as follows:
1. Following the caption "Summon Defendants", place the Buyer's full name and address in the appropriate blanks.
2. Following the blank provided for the Buyer's address and ending with the word 'and', place the Seller’s full name and address in the appropriate blanks.
3. The next set of blanks require entry of a court date and time which will be completed by the Sheriff when he serves the summonses on the buyer and seller.
4. Following the word "Plaintiff", place the Broker's own name and business address in the appropriate blanks.
5. In the only blanks in the second paragraph which begin with the words "WHEREBY, PLAINTIFF REQUESTS . . ", place the dollar amount in dispute by first writing out that amount ( e.g., Five hundred and no/100 ), and second by writing the actual numerals ( e.g., $500.00 ).
The Broker should complete no other blanks on this Form.
The Broker may take an extra copy of the Interpleader Form when filing the original and request the attending clerk to stamp the copy “filed”. The Broker should retain this copy with the appropriate receipt(s) for record purposes.
At the same time the Interpleader Form is filed (with the contract as an addendum) an Interpleader Warrant, Bill of Costs and Judgment Form must also be filed.
The blanks on this form will be completed by the General Sessions Judge.
When this
process is completed, The Court will issued a petition to be served on both the
Buyer and the Seller.
For the Broker’s information the following is the Tennessee Statute and the Rules of the Tennessee Real Estate Commission authorizing the filing of the Interpleader petition.
INTERPLEADER
DEFINITION: A legal proceeding whereby an innocent third party (stakeholder), such
as an escrow agent or broker, can deposit with the court property or money that
he or she holds and that is subject to adverse claims so that the court can
distribute it to the rightful claimant. The distribution of deposit or earnest
money held in escrow is often a problem when the buyer and seller are in dispute
over the purchase contract. If the escrow agent cannot get the parties to agree
an the disposition of the deposit money, the recourse is to file an interpleader action asking the
court to accept the money and distribute it to the rightful claimant.
When the broker is holding the earnest money, the broker may originate
the interpleader.