Escrow Instructions

Escrow instructions are written documents, signed by the parties, which directs the escrow officer in the specific steps to be completed so the escrow can be closed. Typical instructions would include the following:

• The method by which the escrow holder is to receive and hold the purchase money to be paid by the buyer.
• The conditions under which a lapse of time or breach of purchase contract provision will terminate the escrow without closing.
• The instructions and authorization to the escrow holder to disburse funds for recording fees, title insurance policy, real estate commissions and any other closing cost incurred through escrow.
• Instructions as to how insurance and taxes are pro-rated.
• Instructions to the escrow holder on the payment of prior liens and charges against the property and distribution of the new sale proceeds.

Since the escrow holder can only follow the instructions as stated and may not exceed them, it is extremely important that the instructions be stated clearly and be complete in all details.

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