The short answer
Escrow instructions govern how funds and documents move at closing. Here is who writes them and what the brokerage file should hold. The escrow holder drafts them from the executed purchase contract, both parties sign in most escrow states, and escrow can only act on what the signed version says. When a disbursement is questioned months later, the instructions are the reference document, so the brokerage needs the same version escrow acted on.
What escrow instructions are
Escrow instructions are the written directions that tell the escrow holder what to collect, what conditions to verify and how to disburse funds and documents at closing. They are the operational contract of the closing itself.
The purchase contract describes an agreement between two people. The instructions convert that agreement into tasks for a neutral third party who was not at the negotiating table. The contract says the buyer pays 458,500 dollars. The instructions say the escrow holder collects 458,500 dollars, verifies title is clear of everything except the listed exceptions, pays the seller's mortgage payoff from the proceeds, prorates taxes to the closing date, records the deed before the deed of trust, and wires the balance to the seller's named account.
That translation is where errors enter. An escrow officer who misreads a proration date or a commission split produces a settlement statement that is internally consistent and wrong. Both agents get one review pass before signing, and that pass is the last chance to catch it cheaply.
| Section | What it specifies | What breaks when it is wrong |
|---|---|---|
| Parties and property | Legal names of buyer and seller and the legal description | A name that does not match title or the contract stops recording |
| Purchase price and deposits | Total price, earnest money amount, additional deposit dates | Escrow will not proceed on a deposit it never received |
| Financing terms | Loan amount, type, and the lender delivering funds | Wrong loan amount produces a settlement statement that will not balance |
| Conditions to close | Items escrow must verify before recording: clear title, payoff figures, signed documents, funds in hand | An unmet condition holds the file even when everybody wants to close |
| Prorations | Taxes, HOA dues, rents, interest, and the proration date used | The proration date drives dollars, and it is the most common late correction |
| Disbursement authorization | Who is paid what, in what order, and by what method | Nothing leaves escrow without a line here authorizing it |
| Commission instruction | Amount payable to each brokerage, sourced from the contract and the commission disbursement authorization | Missing or mismatched CDA delays the brokerage payment, not the closing |
| Recording and delivery | What records, in what order, and where documents go afterward | Recording order decides lien priority |
| Cancellation and dispute | What happens to the deposit if the transaction fails | Without it, a disputed deposit sits until both sides sign a release or a court rules |
| Signatures and date | Every party who must sign, plus the date the instructions take effect | An unsigned party means escrow holds no authority for that side |
Who issues them
In most escrow states, both parties sign bilateral instructions prepared by the escrow holder from the purchase contract. Some states use unilateral instructions from each side. The purchase agreement governs if terms conflict, in most jurisdictions.
Bilateral instructions are one document. Buyer and seller both sign it, both see the same terms, and the escrow holder has a single authority to work from. Unilateral instructions are two documents. Each party signs only its own, covering its own deposits and its own disbursements, and neither side sees the other's directions. Unilateral structures are common in Washington and in commercial closings where the parties want their internal figures kept private.
| State | Usual structure | How it works in practice |
|---|---|---|
| California | Bilateral | Escrow holder prepares from the contract, both parties sign, amendments signed by both |
| Arizona | Bilateral | Escrow agent prepares, joint instructions are standard practice |
| Nevada | Bilateral | Escrow prepares, both sides sign, common for instructions to reference the contract by name |
| Washington | Unilateral | Each party signs its own instructions to the closing agent |
| Oregon | Bilateral | Escrow prepares, joint signature standard |
| Texas | Contract-driven | Title company closes from the contract itself, with limited supplemental instructions |
| Florida | Contract-driven | Title agent or attorney closes from the contract, with closing instructions where a lender requires them |
| New York | Attorney-directed | Attorneys direct the closing, escrow terms sit in the contract and in attorney letters |
| Illinois | Trust or escrow agreement | Northern Illinois often uses a title company escrow trust instruction document |
| Georgia | Attorney-directed | Closing attorney holds funds and directs disbursement under state bar rules |
General practice patterns as of 2026. Local custom varies within states, particularly between northern and southern California and between northern and southern Illinois. Confirm with the settlement provider for the county.
Attorney states change the cast without changing the function. In New York, Georgia and much of New England, the closing attorney holds funds and directs disbursement, with the terms living in the contract and in attorney correspondence rather than in a document called escrow instructions. The brokerage obligation is the same: retain whatever document actually authorized the disbursement.
When instructions and the contract conflict
The contract normally wins. Courts in most jurisdictions treat the purchase agreement as the substantive contract between the parties and the escrow instructions as directions for performing it. If the contract says the closing date is April 8 and the instructions say April 10, the parties are still bound to April 8 between themselves.
There is one important exception. Instructions signed after the contract, containing clear language showing the parties intended to modify the earlier agreement, can operate as an amendment. California courts have found this where the instructions expressly stated they superseded prior agreements and both parties signed knowingly. That is a narrow path, and nobody should rely on it deliberately.
The operating rule for a brokerage is simpler than the case law. Never let a conflict exist. When the parties change a term, amend the contract and amend the instructions in the same round of signatures, with matching numbers and matching dates. A file where the contract says 458,500 and the instructions say 465,000 is a file with an argument waiting inside it, regardless of which one a court would eventually prefer.
Where instructions sit in the closing sequence
Instructions arrive after the contract and before anything moves. Everything downstream, including the commission payment, depends on them being signed, current and consistent.
Where instructions sit between contract and disbursement
Step 1
Contract executed
Terms fixed. The instructions will be written from this document.
Step 2
Escrow opened
File number issued, earnest money deposited, title order placed.
Step 3
Instructions drafted
Escrow holder converts contract terms into operational directions.
Step 4
Instructions signed
Escrow gains authority. Nothing before this point authorizes a disbursement.
Step 5
Amendments
Every contract change needs a matching signed instruction amendment.
Step 6
Conditions verified
Clear title, payoffs, signed loan documents, funds received.
Step 7
CDA delivered
Brokerage commission disbursement authorization reaches escrow.
Step 8
Recording
Deed and security instrument record in the order the instructions set.
Step 9
Disbursement
Funds released exactly as the signed instructions and CDA direct.
Two steps in that sequence cause most of the late problems. Instructions signed but never amended after a contract change, and a commission disbursement authorization that reaches escrow after the settlement statement is already drafted. Both are calendar problems rather than legal ones, and both are solved by treating instruction delivery as a dated file requirement rather than as something escrow will chase.
Tracking amendments in the file
Escrow acts on the last signed version. That single fact is why amendment tracking matters more than storing the original.
A file that holds instructions plus four loose amendment PDFs, none of them numbered, forces whoever reviews it to reconstruct the current state by reading all five documents in the right order. A file that holds the same documents plus a log answers the question in ten seconds. Brokerages running closing document management keep the log as a field set on the transaction rather than as a separate spreadsheet, so the current closing date, price and disbursement terms are readable without opening a document.
| No. | Date signed | Provision changed | From, to | Signed by | Reason | In file |
|---|---|---|---|---|---|---|
| 1 | 2026-03-04 | Closing date | March 28 to April 8 | Both | Buyer loan approval delay | Yes |
| 2 | 2026-03-11 | Purchase price | 465,000 to 458,500 | Both | Repair credit negotiated after inspection | Yes |
| 3 | 2026-03-19 | Disbursement | Added 3,200 roof holdback to seller proceeds line | Both | Work not complete at closing | Yes |
| 4 | 2026-03-25 | Commission | CDA replaced, listing side 2.5 percent to 2.35 percent | Broker | Referral fee added | Yes |
Sample log. Copy the column headings into the transaction file and add a row for every signed amendment.
Three rules keep the log honest. Number every amendment sequentially, including the ones that only fix a typo. Record the signature date rather than the date somebody drafted it, because signature is when authority changes. And never overwrite a stored instruction document with a revised version. Add the amendment as a new file item, because the history is the point.
Instructions and the commission disbursement authorization
The commission line in the instructions and the CDA have to agree, or the brokerage does not get paid on the closing date.
The instructions authorize escrow to pay a commission at all. The CDA, issued by the brokerage on its letterhead, tells escrow the exact amount and who to make the check or wire out to, including any referral fee, team split or agent-paid transaction fee handled at closing. Escrow needs both. Instructions without a CDA leave escrow with authority and no payee detail. A CDA that does not match the instruction amount leaves escrow with a discrepancy it cannot resolve on its own, so it stops and calls.
Reconcile the two the day the settlement statement preview arrives, not the morning of closing. Compare the gross commission in the contract, the commission line in the instructions, and the total on the CDA. If all three match, the payment lands with the funding. If any two differ, fix the source document rather than asking escrow to make an adjustment, because escrow adjustments do not update the brokerage record and the discrepancy reappears at reconciliation.
What belongs in the brokerage file
The executed instructions and every amendment. When a closing dispute arises, the instructions are the reference document, and the brokerage should hold the same version escrow acted on.
A complete closing record contains six items: the executed instructions with all signatures visible, every numbered amendment with its signature date, the amendment log, the CDA the brokerage issued, the final settlement statement, and the disbursement confirmation showing the commission actually arrived. Together those answer every question a broker, an auditor or an attorney is likely to ask about the money.
Retention runs on state license law, commonly three to five years from closing, and the obligation sits with the broker rather than the agent. Escrow keeps its own file, but escrow is not the brokerage's record and escrow companies close, merge and purge. A brokerage that relies on requesting documents back from a settlement provider two years later is relying on somebody else's retention policy to satisfy its own.
Frequently asked questions
Who prepares escrow instructions?
The escrow holder prepares them in most cases, drawing the terms from the executed purchase contract. In attorney states the closing attorney performs the same function, and in a few markets the parties' attorneys draft the instructions directly. Whoever drafts them, both parties sign, and the escrow holder acts only on what the signed version says.
What is the difference between unilateral and bilateral instructions?
Bilateral instructions are one document signed by both buyer and seller, so each side sees the other's directions. Unilateral instructions are separate documents, each signed by one party, covering only that party's deposits and disbursements. Bilateral is the norm in escrow states such as California and Arizona. Unilateral appears in Washington and in some commercial closings where the sides prefer not to share terms.
Can escrow instructions override the purchase contract?
Generally no. Most jurisdictions treat the purchase agreement as the governing contract and the instructions as directions for carrying it out. Where the two conflict, the contract usually controls unless the instructions were signed later and clearly express an intent to amend. The safe practice is to amend the contract and the instructions together so no conflict exists.
How are escrow instructions amended?
By a written amendment signed by every party who signed the original. Verbal changes, email requests and one-sided notes do not change what escrow is authorized to do. Each amendment should be numbered, dated, and describe exactly which provision it replaces, because escrow acts on the last signed version and nothing else.
Does the brokerage keep escrow instructions?
Yes. The executed instructions and every amendment belong in the brokerage transaction file, not only in escrow's file. State license law requires brokerages to retain records material to the transaction, commonly for three to five years. When a disbursement is questioned later, the brokerage needs to show the same version escrow acted on.