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SEC. 1057. Delivery in escrow
DELIVERY IN ESCROW. A grant may be deposited by
the grantor with a third person, to be delivered on
performance of a condition, and, on delivery by the
depositary, it will take effect. While in the
possession of the third person, and subject to
condition, it is called an escrow.
In this case, the Grant Deed was jointly delivered by the
Partnership and AAL to the Title Company with the escrow
instructions, so under section 1057 of the California Civil Code
and California case law, title to the Fitch Property did not pass
to AAL until performance of the conditions in the escrow
instructions had been achieved. It has long been held in
California, as elsewhere, that delivery of an instrument in
escrow conveys no title. In re Chrisman, 35 F. Supp. 282 (S.D.
Cal. 1940). Consequently, the warranty deed was delivered to AAL
in 1994 when the terms of the escrow were satisfied, and the deed
was duly recorded, and not before.
Petitioners seek to bring their facts within those of Keith
v. Commissioner, 115 T.C. 605 (2000), to show that a title
closing is not necessary to establish a closed transaction. The
facts of Keith, however, are specifically relevant to a form of
transaction under Georgia law known as a “contract for deed”.
Georgia law normally construes a contract for deed as a device
for passing equitable ownership, leaving the seller with
essentially a security interest. Id. at 614.
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Last modified: May 25, 2011