The preparation of escrow instructions

An escrow officer will perform only as instructed. Escrow instructions are prepared by the escrow officer based on the information received from the seller’s agent about the transaction. [See RPI Form 401; Moss v. Minor Properties, Inc. (1968) 262 CA2d 847]

In practice, the escrow officer prepares the instructions on forms adopted for this use. Once completed, the instructions are forwarded to the agents of the persons in the transaction for their signatures and return to escrow. When returned, escrow is then open for the person who signed and returned the instructions.

Two types of escrow instructions are used in California:

  • bilateral; and
  • unilateral

Throughout most of California, escrow instructions used in real estate sales transactions are bilateral in nature. As bilateral escrow instructions, they are entered into by both the buyer and seller. Each signs a copy of the same instructions and hands them to escrow. [See RPI Form 401]

In some areas of Northern California, separate sets of unilateral escrow instructions are prepared, usually waiting until the transaction is ready to close. Each set of instructions contain only the activities to be performed by or on behalf of one person; one set being the buyer’s instructions, the other set the seller’s instructions.  When escrow determines it has all documents necessary to call for funding and closing the transaction, the officer prepares the separate instructions for signatures of the respective buyers and sellers.