Leaving Blanks in the RPA: Taking on Someone Else’s Liability

Would you be surprised to learn that some real estate agents are leaving BLANKS in the residential purchasing agreements (RPAs) when submitting to escrow? While this is not a legal practice, it appears that this is not an uncommon. Plus, it has induced some escrow officers to then fill in these blanks with their company-owned providers.

So what is wrong with this practice and what could be the ramifications for the Agent, Officer and Client? Who would be liable for any errors or omissions made by the chosen company- the Agent or the Escrow Officer?
a4b4

California Financial Codes 17403.2 and 17403.3 states that “No one shall solicit or accept an escrow instruction containing any blank to be filled in after that signing.” These laws were codified to prevent altered written instructions from being erroneously accepted by escrow, thus ensuring that the parties’ instructions are followed completely.

By leaving blanks, has the Agent skirted their obligation? By filling in the blanks, has the Escrow officer helped the Agent or have they altered the escrow instructions without approval from the parties? If an Agent leaves a blank and an Escrow Agent fills it in with a company who makes a mistake – who is liable to the Client? The Agent who has a fiduciary duty to use due diligence in selecting the best companies for their Client or the Escrow Officer who is forbidden by law from changing escrow instructions?

Send us your thoughts.