April 18th, 2016 at 8:35 pm
•? “We opened escrow.”
•? “We’re in escrow.”
•? “We haven’t closed escrow.”
•? “Escrow has not been cancelled.”
Is having a pending escrow file the same thing as having a “valid contract”?
Answer: No. In practice, we often use these phrases to describe a pending sales transaction. However, from a legal standpoint, whether the parties have a valid contract depends on whether they entered into an agreement and are performing the terms of that agreement. Of course, the fact that the parties have a pending escrow file tends to show that the parties have a valid contract. But the ultimate determination as to whether a contract is valid depends on all the facts and circumstances, not just whether the parties have a pending escrow file. Hence, when you are a buyer’s agent, and your buyer has just received an accepted offer, don’t be fooled if the listing agent says, “Your buyer doesn’t have a valid contract because we haven’t opened escrow yet.” Or when you are a listing agent, and the buyer has failed to perform on a pending transaction, don’t believe a buyer’s agent who says, “Your seller must sell to my buyer and no one else, because we are in escrow.” Parties can have a valid contract but no pending escrow file, or they can have a pending escrow file, but no obligation to perform.
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