Delivery and Escrow Transactions

1
Delivery and Escrow Transactions
There is more on Escrows in Ch. 16. Closings and
Escrows
2
DELIVERY

• A deed is not effective to transfer title until
  the Grantor has demonstrated a present and
  unconditional INTENTION to vest title or some
  other identified interest in the Grantee.
• Delivery of a deed does not require that the
  Grantor divest himself of possession of the
  writing, but does require proof of the Grantors
  present intent to divest himself of title.

3
ESCROW TRANSACTIONS

• The usual purpose of an escrow transaction is
  break the act of delivery the giving and the
  taking into two steps.
• Stated differently, it is to freeze time so as
  to permit the performance of concurrent
  conditions at different times.

4
The Escrow Two-Step
(1)
(2)
GR----------------gt E
------------------gt GE
Delivery to the GE
Delivery from the GR
5
The Doctrine of Relation Back-- A Fiction
Where a court finds that it is equitable to do,
i.e., considerations of fairness and justice
require, the court will find that time title
vested in the Grantee was at Step 1 for purposes
of the problem in question, but not otherwise.
The court will find that the Grantees title
relates back to the time of delivery from the
Grantor, not at the time of delivery to the
Grantee. Why should this be? Remember that
this doctrine is a fiction and it is alright to
invoke a fiction to reach a fair result as long
as you and the court know the fiction is just
that (and not literal truth).
6
The Relation Back Doctrine Illustrated
(1)
(2)
GR----------------gt E
------------------gt GE
Delivery to the GE
Delivery from the GR
7
Do any of the following create an Escrow
Transaction?

• O deposits an executed deed with E, saying
• Give this to A after I die, unless I ask for it
  back first.
• Give this to A after I die, unless I tell you to
  give it to her sooner.
• Give this to A if she deposits 50,000 with you
  by June 1, otherwise, return it to me.
• Please remember that, on the Final Exam, what
  will count is not being able to say which creates
  an escrow, but explaining WHY it does or does not
  create an Escrow.