- August 20, 2003
- All Issuing Offices in Florida
- Escrow Agreement Format
In conjunction with a closing, a title agent may be asked to hold funds for the benefit of the parties pending repairs to the property or installation of equipment, etc. (this Bulletin does not cover security escrow agreements for the benefit of the underwriter, such as for a lien that will expire shortly after closing). From time to time we examine escrow agreements because lawsuits have been filed against the agent for enforcement of damages. Our intent with this bulletin is to help agents avoid such lawsuits. Stewart Title Guaranty Company by issuing this Bulletin assumes no responsibility for the proper preparation of an Escrow Agreement. This is strictly intended to assist agents in performing their duties.
Holding escrowed funds is not a part of the title insurance policy and should be done carefully to avoid liability to the agent and underwriter. Stewart Title Guaranty Company should never be mentioned in an escrow agreement as a party without written underwriting approval.
Escrow agreements are often incomplete, failing to address the rights and responsibilities of the agents, or how the parties to the agreement are to dispose of the escrowed funds once the agreement expires. Accordingly, Stewart Title Guaranty Company suggests the following escrow agreement checklist be a guide in helping you:
Escrow Agreement Checklist
1. Date - the agreement should be dated, presumably the same date as the closing.
2. Seller - the seller should be identified exactly as shown in the closing transaction.
3. Buyer - the buyer should be identified exactly as shown in the closing transaction.
4. Lender - should not be mentioned unless the lender is a party to the escrow agreement. In that case, the lender should be identified exactly as it appears in the closing transaction.
5. Title agent - must be identified and sign as a party to the escrow agreement as the agent is holding the funds, and has obligations and rights.
6. Legal Description - should be inserted exactly as it appears in the closing papers.
7. Street Address - may be shown but the legal description is more important.
8. Subject Matter - the agreement should describe the conditions to be performed or the shortcoming that creates the need for the escrow agreement.
9. State the exact dollar amount to hold in escrow.
10. State if the funds are to be invested, who decides upon the investment, and who gets the earnings, if any, from the investment.
11. Duration - the escrow agreement should have a fixed completion or expiration date.
12. Right to Interplead Funds - the escrow agreement should state that in case a disagreement arises between the parties, or the agreement expires without the conditions for disbursement having been met, the agent has the right to deposit the escrowed funds into the court registry and deduct the agent's legal fees and court filing fees, in so doing retain part of the escrowed funds.
13. Conditions for releasing escrow.- When it is documented that all of the conditions for releasing the escrow funds have been satisfied and the written agreement of all parties have been received. In NO event should the escrow agent determine if the parties to the agreement have performed. The escrow agreement should provide that the escrow funds are to be disbursed solely upon the escrow agent's receipt of documents stating that the conditions for the release have been satisfied. This is strictly a ministerial function.
14. The parties should indemnity the escrow agent for any actions that it takes in good faith pursuant to its performance under the escrow agreement.
There is a sample escrow agreement format available through the references section at the end of this bulletin for your guidance.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
- Bulletins Replaced:
- Related Bulletins:
- Underwriting Manual:
- Exceptions Manual:
- FL Sample Escrow Agreement 1