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She’s not wrong. Escrow instructions are to be taken literally and if they say that each party can demand return of its own escrowed property (money or documents) WITHOUT the consent of the other parties to the agreement, you could end up with an unintended result. You don’t want to have that conversation with your client.
I represent lenders in real estate finance transactions and have never shared my escrow instructions with a borrower. I don’t know why they would want to see them and honestly I don’t think I would even consider a borrower’s markup.
This is so overkill. I've had other counsel ask to review lenders instructions and it's silly. If there's a blatant mistake (wrong loan amount, etc.) title will catch that or ignore it. I have our instructions set up so they don't require borrower's signature, so it's not even a borrower loan doc. But just grin and bear it. Maybe they're trying to hit year-end hours and need to review EVERYTHING, lol.
So odd to see such divergent views here. On financing transactions, I’ve done just one transaction where the borrower didn’t sign the escrow instructions because the borrower’s counsel refused out of principle (which came as a surprise to everyone on the deal and caused issues).
Escrow instructions is where I almost always see the borrower’s agreement to pay interest on the loan from the moment of funding, even if we never break escrow and funds are returned to lender for whatever reason. The borrower will also want to know the cutoff time when the title company has to return funds to the lender if they haven’t broken escrow (and strong borrowers will negotiate that provision to be as late as possible). I don’t see why you wouldn’t want a borrower and lender to sign the escrow instructions, and if that’s the case both parties should review.
I’m with A3.
I’m also with the trust no one crowd and review everything (or get my juniors to do so). Doesn’t mean I’m making a heavy markup, but I want to understand everything that’s happening on my deals, it’s learning if nothing else. Especially helpful when clients suddenly ask about something the lawyers don’t pay much attention to or I wind up on the other side now and then.
I typically don’t review these, but I insisto on making clear in the PSA that the terms of the PSA supersede any escrow instructions to the contrary. I’ve never had a problem after adding that language. I’ve never had a problem getting my deposit back if things don’t work out in DD. I’ve never had a problem obtaining financing, but I did have to pull out of a deal once where some of our equity investors fell through. But these contingencies need to be build into the PSA.
The OP never said what party s/he was representing or the type of transaction. It could be a financing of an existing owned property that is not previously financed, a refinancing of an existing loan or simply an all-cash acquisition. I have never signed a document, or asked a client to sign a document, that I have not read.
A3 makes an excellent point!
I have never, I typically see it where parties send in their own instructions only to escrow agent. Usually some language that my instructions supersede if inconsistent (which escrow agent agrees to when they countersign). It's the escrow officer's role to tell me if there's an inconsistency or reason to deviate from the instructions I give them.
I saw this frequently at a previous firm that did exclusively tax credit work. I have not seen it once in my new role doing market rate.
This thread is fascinating. And yes, I fully grasp how lame I sound when I say that.
I generally review them but with a light markup. Further, I will usually try and get other people to do joint escrow instructions. Most people are lazy so will let me draft the escrow instructions for them.