Detailed Answer

This section explains how money held in trust (for example, in a closing escrow or a broker’s/client trust account) is treated in New Hampshire when the deed transferring the property has not yet been recorded. It assumes no particular facts beyond a typical real estate closing where funds are being held while a deed is delivered or recorded.

How legal title and recording interact

Recording a deed is the key step that protects the grantee (buyer) against later claims by third parties. Under New Hampshire law, an unrecorded deed may be valid between the parties who signed it, but it creates risk: a later bona fide purchaser or lienholder who records first may take priority over an unrecorded instrument. For a person holding sale proceeds in trust, that risk is why many closing instructions require the deed to be recorded (or a title policy issued) before releasing funds.

Can funds be released before a deed is recorded?

Short answer: sometimes — but it depends on the written agreements and the escrow agent’s legal obligations.

Key factors that determine whether an escrow agent or closing lawyer can release trust funds before recording include:

• Escrow/closing instructions and the purchase contract. The contract or escrow instructions usually list conditions for release (for example, delivery of a fully executed deed, recording, issuance of title insurance, payoff of liens). If recording is an express condition, funds should not be released until that condition is satisfied or legally excused in writing.
• Mutual written agreement of the parties. If buyer and seller (and any lender whose lien is concerned) sign a written release directing the escrow holder to disburse funds before recording, an escrow agent typically may follow that instruction and release funds. Written, signed instructions reduce the escrow agent’s exposure to claims.
• Title insurance or a title company’s assurances. If a title company is willing to issue (or has issued) an owner or lender policy that insures despite the deed not yet being recorded, parties sometimes agree to release funds sooner. The title company may add conditions or exceptions; read those carefully.
• Delivery of the deed vs. recording. In many jurisdictions delivery of a valid deed transfers legal title between grantor and grantee even before recording, but recording gives public notice. If the deed has been properly delivered and accepted, an escrow agent may consider that part of the condition satisfied — but the escrow instructions and local practice control whether funds should still be held until actual recording.
• Escrow agent’s exposure and local rules. Brokers, attorneys, and title companies must follow licensing or professional rules that govern how they handle trust funds. Those rules may require stricter safeguards and can make an escrow holder liable if they disburse funds contrary to written instructions or law.

What an escrow agent can do if parties disagree

If the buyer and seller disagree or the escrow holder fears liability, common safe-guard steps include:

• Refuse to disburse until the recorded deed (or other agreed condition) is produced.
• Ask the parties for joint, signed written instructions authorizing release despite non-recording.
• Require the title company to provide an underwritten assurance or conditional title policy that protects the payor.
• Interplead the funds or deposit them with the court and ask a judge to decide who is entitled to the money. Interpleader avoids the escrow agent being stuck between competing claimants.

Practical scenarios

• If the deed is signed and handed to the closing agent but county recording is delayed due to administrative backlog, parties commonly (a) accept a title company’s temporary assurance and permit disbursement or (b) agree in writing to hold funds until the deed is recorded. Either approach is acceptable if documented.
• If the seller refuses to permit recording after receiving proceeds, the buyer may have contractual and equitable remedies (rescission, return of funds, or a court order for specific performance). The buyer’s practical protection is to insist on recording before funds are released or to leave sufficient protections in the escrow instructions.
• If the escrow agent mistakenly releases funds before recording and a later-recording creditor or purchaser has priority, the escrow agent (and possibly the party that directed the release) can face claims for damages. That is why many escrow agents require clear, signed waivers or written mutual direction to proceed.

Steps to take right now if you’re a party to such a transaction in New Hampshire

• Find and read the purchase-and-sale agreement and the escrow/closing instructions to see the listed conditions for disbursement.
• Request written confirmation from the title insurer or closing agent about what will be insured if funds are released before recording.
• Get any agreement to release funds in a single, signed writing from all required parties (buyer, seller, lender if applicable).
• If you are the escrow holder and there is a dispute you can’t resolve, consider filing an interpleader or asking the court for directions to avoid personal liability.

For New Hampshire statutory materials and to research recording law, see the state statutes index: New Hampshire Revised Statutes Annotated (RSA) index. To locate local county recording requirements or office hours, consult your county’s Register of Deeds or the title company handling the closing. For assistance locating counsel, see the New Hampshire Bar Association.

Disclaimer: This article explains general principles under New Hampshire law for educational purposes only. It is not legal advice and does not create an attorney-client relationship. For advice about a specific transaction, speak with a licensed New Hampshire attorney or the closing/title agent handling your transaction.

Helpful Hints

• Always put escrow and closing instructions in writing. Oral directions create risk for everyone.
• If you are the buyer and want ultimate protection, insist that the deed be recorded (or a title policy issued) before funds are disbursed.
• If you are the seller and need proceeds fast, negotiate an express written agreement that allocates the recording risk and, if possible, obtain a written title company assurance that it will cover loss tied to delayed recording.
• Ask the escrow holder whether they will accept a certified check or wire held until the county records the deed; some escrow agents will release funds the same day recording posts if the recording is verified.
• Keep records of all communications, signed releases, and title or payoff statements — these documents will be critical if a dispute arises.
• If the escrow holder is unsure, interpleader or asking a court for instructions prevents personal liability for wrongful disbursement.
• If you need help finding a New Hampshire lawyer who handles real estate closings or escrow disputes, contact the New Hampshire Bar Association’s lawyer referral resources.