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Escrow Instructions

What is an Escrow?

An escrow is a trust arrangement between two parties who use an impartial third party to facilitate real property sales, business sales, exchanges, loans, leases, securities or other transfers. 

The neutral third party, called an "escrow agent," is instructed to hold all funds and to gather all documents required to complete the agreement. Once this is done, the transaction is said to be in an "Open Escrow" and the escrow remains open until all conditions of the contract are met.

What is an Escrow Officer?

An individual is normally assigned to work the escrow. This person is known as the "Escrow Officer."  The duties of the escrow officer depends on what type of property is being transferred and what conditions there are. 

What are Escrow Instructions?

The escrow is a legal process and all parties must abide by what is called the "Escrow Instructions."  The escrow instructions spell out what has been agreed to between the parties and must meet the basic requirements of a legal contract or it is deemed invalid.

By signing written escrow instructions, the parties indicate their consent to what is in the contract and that they are willing to be bound by the conditions they have agreed upon.

There cannot be fraud, duress, threats, or undue influence by others.  Escrows are a private matter between the parties and all information is considered confidential.

Escrow Agent

An escrow agent or it's officers should not give advice to one or the other party concerning the escrow because they have what is called a fiduciary relationship to all parties involved.  A fiduciary relationship is one of trust.         

The escrow agent is usually a company or corporation that devote all of it's time and resources processing escrows. Many banks, savings and loans associations, title companies and insurance companies also offer escrow services for their customers.


In some states, attorneys provide escrows as part of their legal practice and are governed by the laws of the state in which they practice.

Real Estate Brokers

In other states, Real Estate Brokers may conduct escrows if they are a party to the transaction, meaning, they represent either the buyer or the seller of the property that is being sold, exchanged or leased.

Once all documents have been gathered and funds have been collected and distributed to their intended destinations, recordings have been properly made and all instructions and agreements have been met, the escrow is said to be "Closed."       

Note: This is intended for general information so contact an attorney for legal advice.

About The Author

This information is provided by John M. Roberts,
Broker/Owner of John Roberts Realty, located in Long Beach, CA. He can be contacted at jrobertsrealty@yahoo.com

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