Escrow Instructions Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Escrow Instructions, written in plain English, along with examples of how it is used.

What is Escrow Instructions?

n. the written instructions by buyer and seller of real estate given to a title company, escrow company or individual escrow in “closing” a real estate transaction. These instructions are generally prepared by the escrow holder and then approved by the parties and their agents.

History and Meaning of Escrow Instructions

Escrow Instructions are a critical part of a real estate transaction. They are the written instructions that are prepared by the escrow holder (usually a title company or an escrow company) that outlines the terms and conditions of the agreement between the buyer and the seller. These instructions are then approved by the parties and their agents. The main purpose of escrow instructions is to protect both parties in the transaction until all of the terms and conditions of the agreement have been met.

The use of escrow instructions dates back to the early 20th century, when real estate transactions were becoming more complex, and the need for a neutral third party to hold and disburse funds became necessary. The escrow instructions became an important document to ensure that all parties were on the same page and that the transaction could proceed smoothly.

Examples of Escrow Instructions

  1. In a typical real estate transaction, the escrow instructions will outline the purchase price, the closing date, and any other terms and conditions that need to be met for the sale to close.
  2. If the buyer is obtaining a mortgage to finance the purchase, the escrow instructions will include instructions for the title company or escrow company to disburse the appropriate funds to pay off the seller's mortgage.
  3. If there are any contingencies or conditions that need to be met before the sale can close, the escrow instructions will outline those conditions and specify a deadline for them to be met.

Legal Terms Similar to Escrow Instructions

  1. Title Company - a company that provides title insurance and escrow services for real estate transactions.
  2. Escrow Company - a company that provides escrow services for real estate transactions.
  3. Closing Disclosure - a document that outlines all of the fees and costs associated with a real estate transaction, as well as the terms and conditions of the sale.