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Q: “Is it legal to write ‘To Be Determined’ (TBD)as the Escrow Agent when submitting an offer?”

A: Yes, with a big caveat. There are really three options when it comes to the deposit: 

First, there is no deposit to be collected because the dollar amount is $0. This is completely legal and renders the Escrow Agent moot and irrelevant.  

Second, the Buyer is paying the deposit or has paid the deposit at ratification. In this situation, putting “TBD” in the blank does not work. The reason is simple; you cannot deposit an EMD if you do not have an Escrow Agent. 

Third, the Buyer will pay the deposit in however many days the contract dictates. This is where TBD comes in. The caveat is that since it is part of the contract, an amendment is required when the Escrow Agent is selected. Why does it require an amendment? Since it is a contract term that is negotiated between the parties, both parties must agree on the Escrow Agent. The main difference between an Escrow Agent and a Settlement Agent is that while the Settlement Agent can be selected by the buyer by law, the Escrow Agent holds the deposit, and the seller may receive it. Therefore, the seller presumptively has a right to agree to who holds the deposit. However, it is fine if the Escrow Agent and the Settlement Agent are the same person. 

The biggest practice note is that you need to make sure that an Escrow Agent is named sooner rather than later, so that your agent is not in default. Also, make sure you keep the EMD deadline in mind to avoid any issues with default or with DPOR. 

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