Deed Pt 2: Escrow

Question 1

What is Escrow?

Answer 1

When the grantor places the deed with his 3rd party (Escrow) agent to hold prior to settlement day until the grantee fulfills his conditions.

The agent is a person of the grantor’s choosing.

Question 2

While the deed is in escrow:

Answer 2

1. Something can happen such as a party dies, becomes incompetent or the property is destroyed.
2. Grantor can attempt to convey the escrowed property to a 2nd grantee

If that happens, the grantee can request Relation Back.

Question 3

The Relation Back Doctrine

Answer 3

1. A request from the court to keep the transfer alive by treating the deed as if it passed out of escrow the date that it went in (Settlement completed and Grantee becomes Equitable owner) ONLY if Grantee met his conditions.
2. If 2nd grantee is a BFP without notice, no Relation Back.

Question 4

Things to remember about escrow:

Answer 4

1. The deed can stay in escrow for as long as the escrow agreement says.
2. If grantee cannot meet the conditions then the transfer is void and grantors heirs will get the property.

Question 5

Black letter rule for Deed in Escrow

Answer 5

A deed (Placed in escrow) that leaves escrow without seller’s authorization passes no title and cannot be transferred.

1. Majority: That is true even if the 2nd guy is a BFP and without notice
2. Minority: BFP will win regardless.

Exception: Relation Back Doctrine