When entering a real estate transaction, buyers and sellers should be careful to analyze the escrow instructions that they are agreeing to prior to signing them. The escrow instructions control how the escrow will take place. Our real estate attorneys have a great deal of experience dealing with purchase and sale dispute where the escrow instructions themselves become a key part of the dispute.
An escrow holders’ fiduciary obligations are set by the express provisions of the escrow instructions. (Summit Fin’l Holdings, Ltd. V. Contintental Lawyers Title Co. (2002) 27 C4th 705.) Thus, an escrow agent generally incurs no liability for failing to do something unless the action is expressly required by the escrow instructions (Siegel v. Fidelity Nat’l Title Ins. Co. (1996) 46 CA4th 1181.)
As a result, escrow agents will always look to the provisions of the escrow instructions in deciding how to act. Escrow instruction provisions often include language dictating how buyer’s title is to vest, the date that the buyer is entitled to possession of the subject property, instruments and related documents to be signed and delivered into escrow, which party pays specified fees and costs, and the date for closing escrow. Therefore, buyers and sellers of California real estate property should meticulously plan how they want escrow to operate and, once a dispute arises, analyze the escrow instructions in order to determine whether the parties and escrow agents have abided by their obligations. In California, most residential purchase and sale agreements use the California Association of Realtors’ form which incorporates boilerplate escrow instructions. Even with these boilerplate escrow instructions, escrow companies will typically have their own amended escrow instructions that they ask the parties to sign as soon as the escrow is opened.
As Los Angeles based real estate lawyers, we feel that we have analyzed nearly every aspect of the escrow process used in residential and commercial real estate transactions. For help with your real estate claim or for a 30 minute consultation, contact us by filing out our contact form or by emailing us at or by calling us at 310-954-1877.