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What Are Escrow Instructions?

Escrow is a bond, deed, or other legal document that is in the custody of a third party, an escrow officer, and is only in effect once a specific condition has been fulfilled. Thus, escrow instructions are legal documents that pertain to the necessary steps that an escrow officer must take before the escrow is disclosed. The escrow instructions are validated and signed by the parties who are to give them.

The escrow officer or agent must perform the necessary instructions and limit himself or herself to such directives. Escrow instructions are detailed and accurate in nature so as to prepare the escrow officer to deal with any eventuality that may occur. If the escrow instructions are lacking in precision or accuracy as to what is to be done, the escrow officer cannot act and the escrow may never be released.

A boilerplate form is usually utilized by parties who wish to provide escrow. These allow individuals to provide for all the necessary information merely by filling in the blanks. Escrow instructions typically detail the identity and contact information of the escrow holder, the date and location of the beginning and ending of an escrow, the amount of money involved along with other financial details, the process upon which the escrow agent is to handle the escrow, the conditions and terms of agreement as to how the escrow is to be disclosed, proration conditions, and payments of prior bonds or debts. Once the escrow instructions are signed by the parties and submitted to an escrow agent, they take legal effect.

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