Detailed Answer — how Maryland practice and law treat release of trust/escrow funds before recording

In Maryland real estate transactions, the decision to release funds held in a trust or escrow account before a deed is recorded is usually controlled by the escrow instructions (the written agreement between the parties and the escrow agent or title company) and by the requirements of any lender involved. Recording the deed publicly protects the new owner’s title against later claims. Because recording gives public notice of ownership changes, many buyers, sellers and lenders prefer to see the deed recorded (or receive reliable proof that it has been recorded) before funds change hands.

That said, under typical Maryland practice the escrow agent or title company may release funds before the deed is recorded if the escrow instructions permit it and the parties (including the lender) agree. Title companies and lenders commonly rely on one or more of these safeguards before authorizing release:

• Receipt of a final executed deed and all closing documents, with a firm promise (in writing) to record immediately.
• Receipt of a title company or escrow agent certification that the deed has been delivered for recordation and will be recorded that day, or a copy of the recorded deed or recording receipt returned by the recorder’s office.
• A commitment from the title company to provide owner’s title insurance that protects against recording issues or intervening liens that arise from unrecorded conveyances.
• A lender’s written approval to release funds (often lenders require recorded deed or recorded mortgage as conditions for funding/recording disbursements).
• A short escrow holdback — a portion of the funds retained until a confirmed recordation or until agreed conditions are satisfied.

Because the recording process can sometimes be delayed by clerical issues or county requirements, Maryland title companies often use these intermediate protections to allow closings to proceed without unnecessary delay while still managing risk.

Maryland statutory and procedural context

Recording a deed in Maryland provides notice to the public and affects competing claims to title. If you want to read Maryland’s recording laws and related rules, consult the Maryland Code and county land records resources; the Maryland General Assembly site lets you search the Real Property provisions and the state’s recording statutes: Maryland Code — Statute Search (Real Property/Recording). In practice, many of the questions about releasing escrow funds are governed more by contract (the escrow instructions) and lender requirements than by a single recording statute.

Practical example (hypothetical)

Imagine a buyer and seller sign closing documents on Friday. The buyer wires the purchase funds to the title company’s escrow account. The seller delivers the signed deed, but the county recorder’s office will not process the deed until Monday. The title company may do one of these:

• Hold the funds in escrow until a recording confirmation or copy of the recorded deed is received.
• Release funds immediately if the escrow instructions and lender explicitly allow it and the title company issues an assurance (for example, short-term escrow holdback or title insurance to cover recording lapses).
• Release funds to the seller but retain a portion as a short-term holdback until the recorded deed is returned.

Who bears the risk if funds are released before recording?

Risk allocation depends on the written agreements. If funds are released to the seller and the deed is never properly recorded, a later third-party creditor or a subsequent purchaser who records first could create a dispute. Title insurance or contractual indemnities usually allocate that risk to the title insurer or the party who agreed to the instruction. If a lender funds before proper recordation, the lender’s own funding conditions and loan documents typically address remedies and responsibilities.

When to insist on recorded deed before release

Consider demanding recorded-deed proof before release if:

• You are the buyer funding the purchase without a lender.
• The seller has liens or judgments that could affect title.
• The property has complicated prior ownership or title issues.
• You cannot obtain owner’s title insurance or a title company assurance.

In these situations, waiting for the recorded deed (or at least a recording receipt or recorded instrument number) reduces the chance of later disputes.

How to get quick protection if you must release funds first

• Require the title company to provide a contemporaneous title insurance binder or commitment that covers owner’s and lender’s coverage.
• Obtain a written escrow instruction that makes recording a condition or requires immediate corrective action if the deed fails to record.
• Ask for a recording receipt (often called a “stamp” or recording confirmation) or for the county recorder’s tracking number before final release.
• Use a holdback provision for a small percentage of the proceeds until a recorded deed is delivered.

Bottom line

Maryland practice allows funds in escrow or trust to be released before a deed is recorded, but whether that happens depends on the written escrow instructions, lender rules, and the protections the parties negotiate (title insurance, holdbacks, or written assurances). If you are unsure, do not authorize release without receiving either a recorded-deed confirmation or strong contractual/title-company protections.

Helpful Hints — steps to protect yourself in Maryland closings

1. Read the escrow instructions carefully. Insist that the instructions identify the exact condition(s) that authorize disbursement.
2. Ask for a copy of the recorded deed, a recording number, or a recording receipt before final disbursement.
3. Obtain owner’s and lender’s title insurance at closing; review the title commitment for exceptions.
4. If a lender is involved, get the lender’s written release or consent for any early disbursement.
5. Consider keeping a modest holdback until you receive recorded-document confirmation.
6. Use a licensed Maryland title company or an attorney-handled settlement to ensure familiarity with local recording office practices.
7. If unusual title issues exist (claims, liens, probate), consult a Maryland real property attorney before agreeing to early release.
8. If release occurs before recording, get warranties or indemnities in writing from the party receiving funds and consider requiring title company escrow protection.
9. Contact the county recorder’s office to understand same-day vs. next-day recording windows for your county.

Where to read Maryland law and local rules: Use the Maryland General Assembly statutory search to look up Real Property recording provisions and local recording requirements: Maryland Code — Statute Search. Also check the county land records office where the property is located for practical recording timelines and fees.

Disclaimer: This information is educational only and is not legal advice. It does not create an attorney-client relationship. For legal advice about a specific situation, consult a licensed Maryland attorney with experience in real estate and escrow matters.