Escrow Agreement & Instructions
Escrow Agreement & Instructions
_________________ and _____________, referred to herein as “PRINCIPALS” herewith request that _______________________, referred to herein as “ESCROW AGENT” establish an escrow of the following described items, and dispose of them as is provided herein.
PRINCIPALS herewith deliver the following items to be held by ESCROW AGENT:
_________________________________Any cash funds or cash proceeds shall be deposited by the ESCROW AGENT in an interest bearing account, in institutions which are federally insured for deposits in the amount of the ESCROW, or in direct obligations of the United States of America, including treasury bills or notes with maturity dates coinciding with any distributions to be made hereunder. In the event that non-cash items are deposited, the ESCROW AGENT shall maintain such items in the condition in which they were received.
ESCROW agent shall release the funds and items upon the receipt of instructions from seller, reciting the following:
____________________________________________________________as follows:
_____________________________________________________________said instructions shall be sworn or provided under penalties of perjury.
In the event that instructions are not received on ________, 20__, ESCROW agent shall close the escrow and return the amounts to the parties depositing or providing them originally, and shall then be absolutely discharged.
Upon receipt of such instructions and complying with the same, ESCROW agent shall be discharged as to the amounts so paid. ESCROW agent shall be absolutely discharged upon such payment and may rely solely and totally upon such certifications. ESCROW agent shall not be required to make any independent verification of the correctness of any instructions or the occurrence of any required conditions precedent and shall rely solely on certifications received as provided herein.
In the event of the receipt of conflicting instructions prior to discharge of the ESCROW agent, ESCROW AGENT shall commence an arbitration before a single arbitrator acceptable to ESCROW AGENT under the rules of the American Arbitration Association, whose decision shall be final. Upon receipt of a final decision from the arbitrator, the ESCROW AGENT shall comply therewith and upon such compliance shall be discharged from all further liability. The decision of the arbitrator shall be final, and may be reduced to judgment by any party hereto or the escrow agent.
PRINCIPALS shall indemnify ESCROW AGENT for all actions taken in compliance with this agreement.
The PRINCIPALS shall reimburse the ESCROW AGENT for expenses incurred herein as follows:
___________________________________________________________ESCROW agent shall receive compensation for its services as follows:
___________________________________________________________This is the entire agreement between PRINCIPALS and ESCROW AGENT. ESCROW AGENT is solely acting as a neutral stakeholder and the PRINCIPALS agree that there are no intended third party beneficiaries or parties other than PRINCIPALS to this agreement.
All notices herein shall be served as follows:
TO ESCROW AGENT:
______________________________
______________________________TO PRINCIPALS:
______________________________
______________________________All notices herein shall be sent by certified mail, or by overnight delivery service providing a receipt. Notices sent by certified mail shall be deemed received within one working day after first notice to the recipient for pick up, or when received, whichever is earlier. Notices sent by overnight delivery service shall be deemed received the next business day.
Dated: ____________________________
PRINCIPALS:
______________________________________________________ESCROW AGENT:
______________________________________________________Escrow Agreement & Instructions
Review ListThis review list is provided to inform you about this document in question and assist you in its preparation. This document is extremely useful in insuring that all paperwork and deal details are implemented appropriately by the parties, and the Escrow Agent in particular.
1. Make multiple copies. Give one to each signatory. Keep one with the transaction file.
2. Review the document carefully to be sure all your deal points are covered in this document-which is the operating document for closing and fund disbursement.
Frequently Asked Questions
What is an escrow agreement?
An escrow agreement is a legal document in which principals request an escrow agent to hold and dispose of specified items according to the terms set forth in the agreement. The agreement outlines the responsibilities of the escrow agent and the conditions for release of the escrowed items.
Who are the parties involved in an escrow agreement?
The parties involved are the principals, who deliver items to be held in escrow, and the escrow agent, who is responsible for holding and disposing of those items as instructed. The principals are typically the buyer and seller in a transaction, while the escrow agent is a neutral third party.
What items can be held in escrow?
The agreement allows for both cash funds and non-cash items to be held in escrow. Cash funds are deposited in interest-bearing accounts or direct obligations of the United States, while non-cash items are maintained in the condition in which they were received.
How are cash funds handled in escrow?
Cash funds or cash proceeds are deposited by the escrow agent in an interest-bearing account at federally insured institutions or in direct obligations of the United States, such as treasury bills or notes. The maturity dates of these investments should coincide with any distributions to be made under the agreement.
How are non-cash items handled in escrow?
Non-cash items deposited into escrow are maintained by the escrow agent in the condition in which they were received. The escrow agent is responsible for preserving these items until they are released according to the agreement.
When does the escrow agent release the funds and items?
The escrow agent releases the funds and items upon receipt of instructions from the seller. These instructions must recite the specific terms as outlined in the agreement and must be sworn or provided under penalty.
What instructions are required for the release of escrow funds?
The seller must provide instructions that recite the terms specified in the agreement. These instructions must be sworn or provided under penalty, ensuring their authenticity and compliance with the escrow agreement.
What is the role of the escrow agent?
The escrow agent is responsible for establishing the escrow, holding the deposited items, and disposing of them according to the instructions provided by the principals. The agent must maintain cash funds in interest-bearing accounts or government obligations and preserve non-cash items as received.
Are escrow funds insured?
Cash funds are deposited in institutions that are federally insured for deposits in the amount of the escrow, or in direct obligations of the United States. This provides a level of security for the escrowed funds.
What happens if the escrow instructions are not followed?
The agreement specifies that the escrow agent shall release funds and items only upon receipt of instructions from the seller that comply with the terms of the agreement. If instructions are not followed, the escrow agent may not release the funds or items, and the matter may be subject to legal resolution.
