Escrow & TitleIntermediateArizona Exam

In Arizona, an 'interpleader action' by an escrow company means:

AThe escrow company has filed a lawsuit against one of the parties for breach of the escrow instructions and is seeking damages equal to the disputed funds plus costs
BThe escrow company is depositing disputed funds with the court because of conflicting instructionsCorrect
CThe escrow company is becoming a co-party to the real estate transaction and assuming joint liability with the buyer and seller for the performance of all escrow conditions
DThe escrow company is filing a formal appeal with ADRE of an adverse ruling issued in a complaint proceeding involving the company's handling of the escrow

Why The escrow company is depositing disputed funds with the court because of conflicting instructions Is Correct

Answer B: The escrow company is depositing disputed funds with the court because of conflicting instructions

An interpleader action allows the escrow holder to deposit disputed funds with the court when it cannot determine to whom they belong due to conflicting claims. The court then determines the proper owner without the escrow company taking sides.

Exam Tip: Escrow & Title

Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.

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