Escrow Agreements, Breach of Escrow

Escrow is a term generally used in the context of real estate transactions. A conditional delivery, or delivery in “escrow,” means that delivery is conditioned upon the performance of some act or the occurrence of some event. Hammack v. Coffelt Land Title Inc., 348 S.W.3d 75, 81 (Mo. Ct. App. 2011). It is the same as any other delivery, but is subject to a specific event occurring. “The distinctive feature of an escrow is the delivery of a deed to a third person to await the performance of some condition, whereupon the deed is to be delivered to the grantee and the title is to pass. In such case, it is not a deed until the condition is performed.” Morris v. Davis, 66 S.W.2d 883, 888 (1933).
An escrow agent is charged with performing duties for each of the parties, which neither can forbid without the other’s consent. Nash v. Normandy State Bank, 201 S.W.2d 299, 301 (Mo. 1947). A fiduciary duty is created by the escrow agreement. Eastern Atlantic Transportation and Mechanical Engineering, Inc. v. Dingman, 727 S.W.2d 418, 423 (Mo. Ct. App. 1987). An escrow agent’s failure to strictly follow the terms of the escrow agreement is a breach of fiduciary duty. Id.
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