Legitimate Ways to Complete an Escrow Transaction

Escrow transactions are a fundamental part of the buying and selling process in the real estate world. They serve as a guarantee for both parties, ensuring that certain conditions are met before funds are released. However, not all actions taken during an escrow are legal or acceptable. It is crucial to understand how an escrow transaction can be legitimately terminated and what actions are not.

Legitimate Ways to Terminate an Escrow

  1. Full Compliance with Escrow Instructions: If all parties involved in the transaction have complied with the instructions detailed in the escrow agreement, the transaction can be finalized.
  2. Escrow Cancellation by Mutual Agreement: The parties involved can jointly decide to end the escrow. This would generally require written agreement from both parties.
  3. Cancellation of the Sales Agreement: If for any reason the sales agreement between the parties is cancelled, this would also automatically terminate the associated escrow transaction.

NON-Legitimate Actions in an Escrow

The crucial fact to understand is that, under no circumstances, can either party withdraw funds from escrow themselves. The specifically prohibited action is:

  • Withdrawal of Funds by Either Party: Neither the buyer nor the seller can directly access the funds held in escrow and withdraw a portion or all of the amount. This action must be carried out by the escrow holder, following the specific agreed instructions.


Escrow is a protection mechanism that benefits all parties in a real estate transaction. However, for it to work correctly and fairly, it is essential that all parties respect the rules and regulations that govern it. This includes understanding legitimate ways to complete a transaction and actions that are not acceptable. By working with knowledgeable professionals and following appropriate guidelines, escrow transactions can be handled effectively and efficiently.

Legal and Tax Disclaimer

Please be advised that the content presented in this blog is for informational purposes only and should not be construed as legal or tax advice. The articles and information provided here are written from the perspective of a real estate agent affiliated with Keller Williams, and do not represent legal or tax counsel.

As the author, I am a licensed real estate professional under Keller Williams, holding Brokerage DRE License Number: #02197031. However, it is important to note that my expertise is in the field of real estate, and not in legal or tax matters. The insights and opinions shared on this blog are based on my experiences and knowledge in the real estate industry and should be treated as general guidance rather than definitive legal or tax advice.

For specific legal or tax concerns relating to any real estate transactions or investments, readers are strongly encouraged to consult with a qualified attorney or tax advisor who can provide tailored advice based on your individual circumstances and the latest legal and regulatory requirements.

The information on this blog is provided "as is" without warranty of any kind, and I, along with Keller Williams and its affiliates, disclaim all liability for any loss, damage, or misunderstanding arising from reliance on the information contained herein.

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