Legal Definitions - interplea

An interplea is a formal legal document filed with a court by a party who holds property or funds that are claimed by two or more other individuals or entities. This party, known as a "stakeholder," uses the interplea to ask the court to take possession of the disputed property or funds and decide who the rightful owner is. By doing so, the stakeholder seeks to avoid being sued by multiple claimants for the same property and ensures they are released from liability once the court makes its decision.

Here are some examples to illustrate how an interplea works:

• Life Insurance Payout Dispute: Imagine a person passes away, and their life insurance policy names "my heirs" as beneficiaries. Subsequently, two different individuals, a biological child and an adopted child, both present claims to the insurance company, each asserting they are the sole rightful heir entitled to the entire payout.

  In this situation, the insurance company is the stakeholder. Faced with conflicting claims to the same funds, the insurance company can file an interplea with the court. They would deposit the life insurance payout into the court's registry and ask the court to determine which claimant, or perhaps both, is legally entitled to the funds according to the policy and relevant laws. This protects the insurance company from being sued by both claimants.

• Escrow Funds in a Failed Real Estate Deal: A buyer and seller enter into a contract for the sale of a house, and the buyer places a significant amount of earnest money into an escrow account held by a real estate agent. Before the sale closes, the deal falls apart, and both the buyer and the seller demand the earnest money, each claiming the other breached the contract.

  Here, the real estate agent holding the escrow funds is the stakeholder. To avoid deciding between the buyer and seller and potentially facing a lawsuit from the losing party, the agent can file an interplea. They would deposit the earnest money with the court and ask the court to review the contract and circumstances to determine whether the buyer or the seller is legally entitled to receive the funds.

• Disputed Bank Account Funds: A bank holds a savings account in the name of a deceased individual. After the individual's death, both their surviving spouse and an adult child from a previous marriage present valid-looking documents, each claiming to be the sole beneficiary of the account funds.

  The bank, as the stakeholder, is in a difficult position because it cannot safely release the funds to either party without risking a lawsuit from the other. To resolve this, the bank can file an interplea. They would deposit the entire balance of the savings account with the court and ask the court to decide, based on wills, beneficiary designations, and probate laws, who the rightful recipient of the funds is.