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17 Pac. L. J. 309 (1985-1986)
California Escrow Agents: A Duty to Disclose Known Fraud

handle is hein.journals/mcglr17 and id is 351 raw text is: California Escrow Agents: A Duty to Disclose Known Fraud? In California, most transactions affecting title to real property are consummated through an escrow.' Escrows have been used as early as the Blackstonian Era.2 The original doctrine, only referred to the document delivered to a third person and held until the performance of the specified conditions.3 Modernly, however, the statutory definition covers the entire transaction from the time the escrow agent receives the instructions to the delivery of the conveyance, release of the pur- chase money to the seller, and payment of commissions to the broker.' The use of escrows has become indispensable in modern commer- cial transactions.' Escrows are employed in real estate transactions as well as transactions involving loans, personal property, and sales of promissory notes secured by trust deeds.6 The purpose of creating 1. A. Bowman, Real Estate Law in California 368 (1958). CALIFORNIA FINANCIAL CODE §17003 provides: Escrow means any transaction where in one person, for the purpose of effecting the sale, transfer, encumbering, or leasing of real or personal property to another person, delivers any written instrument, money, evidence of title to real or personal property, or other thing of value to a third person to be held by such third person until the happening of a specified event or the performance of a prescribed condi- tion, when it is then to be delivered by such third person to a grantee, grantor, promisee, promisor, obligee, obligor, bailee, bailor, or any agent or employee of any of the latter. Id. 2. See W. Blackstone, Blackstone's Commentaries on the Law *307 (B. Cavit 2d ed. 1941). 3. Id. A delivery may be absolute, . . . or to a third person, to hold till some conditions be performed on the part of the grantee: in which last case it is not delivered as a deed, but as an escrow, that is, as a scroll or writing, which is not to take effect as a deed till the conditions be performed; and then it is a deed to all intents and purposes. Id. 4. CALIFORNIA FINANCIAL CODE §17003 (enacted in 1951 as part of the Escrow Law; ex- panding the statutory definition of escrow to include the entire transaction). 5. Anderson, Escrows as Method of Bringing in and Keeping Customers, 30 Title News 2 (1951). 6. See CALIFORNIA FIANcIAL CODE §17003. Escrows may be used in transactions affecting real or personal property and may involve conditional delivery of any written instrument, money, and evidence of title to real or personal property or other thing of value. Id; see, e.g., Bailey v. Security Trust Co., 179 Cal. 540, 548, 177 P. 444, 447 (1919) (stock certificates); Witmer Bros. Co. v. Weid, 108 Cal. 569, 574, 41 P. 491, 493 (1895) (promissory notes); Foster v. Los Angeles Trust & Say. Bank, 36 Cal. App. 460, 462, 172 P. 392, 393 (1918) (money). The discussion in this comment will be limited to the use of escrows in real property transac- tions although the concepts discussed extend to other transactions.

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