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Short answer: In Wisconsin, funds held in escrow or trust can be released before a deed is recorded, but only when the parties’ written escrow or trust instructions and the law allow it. Recording a deed protects future purchasers and provides public notice, but recording itself is not always the legal event that completes the transfer of title or that alone determines whether funds should be released.

How transfer and recording differ under Wisconsin law

Under Wisconsin law, the legal transfer of real estate generally occurs when a properly executed deed is delivered to and accepted by the grantee — not when the deed is recorded. Recording is important because it gives public notice and affects priority against later purchasers and creditors. See Wisconsin’s recording statutes for details: Wis. Stat. ch. 706 (Recording).

When an escrow agent or trustee may release funds before recording

An escrow agent, closing attorney, title company, or trustee should follow the written escrow instructions, trust terms, or closing agreement. Common lawful reasons to release funds before recording include:

• The escrow instructions specify release upon delivery and acceptance of a signed deed (even if the deed will be recorded shortly thereafter).
• The parties agree in writing that recording may follow disbursement (for example, to permit a short delay for recording the deed while payoff of a mortgage occurs).
• The closing involves title insurance or other protections that the buyer accepts in lieu of immediate recording.

When releasing funds before recording is risky or improper

Releasing funds before recording can create risk if the deed has not in fact been delivered or accepted, or if the deed is defective, forged, or subject to undisclosed liens. Specific issues include:

• If the deed wasn’t actually delivered to the buyer, money paid to the seller could leave the buyer without an effective way to obtain title.
• If the deed is defective (e.g., incorrect legal description, missing signatures, or missing notary requirements), the buyer may not acquire marketable title even though funds were paid.
• If the deed is delivered but not recorded, a subsequent purchaser or lender who records first could gain priority over the buyer in some situations.

Practical protections used in Wisconsin closings

To manage risk, parties and escrow agents commonly use one or more of the following:

• Written escrow instructions that list the exact conditions for release (e.g., executed and delivered deed, title insurance commitment, payoff receipts, lien releases).
• Title insurance that protects the buyer or lender against title defects or priority issues caused by failure to record promptly.
• Conditional disbursements where some funds are held until the deed is recorded or until the escrow agent receives a certified recording receipt or image from the register of deeds.
• Using a closing attorney or licensed title company to coordinate recording and disbursement so that funds and documents move in tandem.

What an escrow agent should consider before releasing funds

Escrow agents and trustees should ensure they have:

• Clear, written instructions signed by the parties.
• Evidence the deed was duly executed and actually delivered to the grantee.
• Title commitments or insurance that match the intent of the transaction.
• Payoff statements or lien releases required for a clear transfer of title.

Remedies if funds were released improperly

If funds were disbursed in violation of escrow/trust terms or without meeting agreed conditions, possible claims include breach of contract, breach of fiduciary duty (against the escrow agent or trustee), conversion, or related claims to recover funds. Remedies depend on the exact facts and timing. See Wisconsin’s trust rules for trustee duties: Wis. Stat. ch. 701 (Trusts) and consult an attorney for case-specific remedies.

Example hypotheticals

Hypothetical A — Safe release: Buyer and seller sign escrow instructions stating the escrow agent will release funds when the seller delivers a properly executed deed to the escrow agent and the title company issues a commitment for title insurance. The deed is delivered and accepted. The agent releases funds and the title company records the deed later the same day. This is a routine, low-risk workflow.

Hypothetical B — Risky premature release: The escrow agent pays the seller immediately after signing but before receiving the executed deed or any title assurance. Later the buyer discovers the seller did not actually sign the deed. The buyer may have claims to recover funds and to enforce the agreement, but the situation becomes contentious and costly.

Bottom line

Recording is important but not the sole legal event that controls whether funds may be released. In Wisconsin, the key questions are what the escrow or trust instructions require, whether the deed was properly executed, delivered, and accepted, and whether the parties have appropriate title protections (for example, title insurance). When in doubt, escrow agents and parties commonly require proof of recording or other written conditions before releasing funds to reduce risk.

Disclaimer: This article is educational only and does not constitute legal advice. For guidance specific to your situation, consult a licensed Wisconsin attorney.

Helpful Hints

• Always use written escrow or closing instructions that list exact release conditions.
• Prefer “release on delivery and acceptance of deed plus title insurance” as a standard condition.
• Ask the closing agent for confirmation of recording (an image or recording number) before releasing all funds if you want that extra protection.
• Consider splitting disbursements: pay the seller and keep a small holdback until the deed is recorded and recorded evidence is provided.
• Obtain title insurance to protect against defects that recording alone may not cure.
• If you are an escrow agent or trustee, follow the written instructions strictly and document every step to limit liability.
• Count on delivery and acceptance of the deed (not just signing) as a legal milestone for transfer, and document delivery.
• If a problem arises after disbursement, contact a Wisconsin real estate attorney promptly to preserve remedies.