David,

Thank you so much for responding to my question.  Your insights and counsel on this board are always very much appreciated!

Andy Lemmenes
Baker, Johnsen, Sandblom & Lemmenes
30 North 8th Street
PO Box 337
Humboldt, IA 50548
Phone: 515-332-1157
Fax: 515-332-5785
 
This message is confidential and privileged and is being transmitted to you pursuant to the privileged communications doctrine of the attorney-client work product privilege.  It may not be used or disclosed by any person other than its addressee(s).  If received in error, please contact the sender.  This message and any attachments have been scanned and are believed to be free of any virus or other defect.  However, as with all email messages and attachments, you should check each to make certain that it is virus free.  Baker, Johnsen, Sandblom & Lemmenes is not responsible for any loss or damage arising from use of this message.  Please contact info@humboldtlaw.com if you need assistance.



-----Original Message-----
From: realestate-owner@iabar.org [mailto:realestate-owner@iabar.org] On Behalf Of realestate@iabar.org
Sent: Friday, May 18, 2018 11:57 AM
To: realestate@iabar.org
Subject: [ISBA RealEstate] assignment of vendor's interest in installment contract to vendor's revocable trust


Probably you'll need to create a trustee's deed, Mr. Lemmes. 
At least, given your description of the facts, I recommend that course.

Ordinarily our law recognizes as valid and effective a delivery of an instrument to an "escrow" agent, when transfer is accompanied by instructions to pass the instrument on to a grantee at some later time after described conditions be performed.

Brandt v. Schucha, 250 Iowa 679, 96 N.W.2d 179 (1959):
"Plaintiff... claims to own the land: first, as grantee of a deed executed September 10, 1956, by Mrs. Neitzel and placed by her in escrow with J. A. Liggett at Roundup...
"I. Of course delivery is essential to the validity of a deed. Wagner v. Wagner, 249 Iowa 1310, 90 N.W.2d 758, 762, and citations; Jeppesen v. Jeppesen, 249 Iowa 702, 88 N.W.2d 633, 636; 26 C.J.S. Deeds § 40. ...
"We have frequently held an effective delivery may be made by placing the deed with a third person, without reserving the right to recall it, with instructions to deliver to the grantee upon the grantor's death. The effect of thus placing the instrument with a third person is to reserve a life estate to the grantor with title immediately passing to the grantee but the latter's right to possession is postponed until the grantor's death. Hilliard v. Hilliard, 240 Iowa 1394, 1399–1400, 39 N.W.2d 624, 627, and citations; Ferrell v. Stinson, 233 Iowa 1331, 1337, 11 N.W.2d 701, 704; Smith v. Fay, 228 Iowa 868, 873, 293 N.W. 497.
"Under these precedents if it were not for the reservation of the right to recall the deed in the letter to Mr. Liggett there would have been a valid delivery on September 10, provided Mrs. Neitzel intended to vest title in plaintiff at that time..."

Can't find in the Iowa decisions any formal definition of "escrow agent" adopted by Iowa courts.
But here is one that appears useful, which I extract from Texas law:
An escrow agent is a neutral, impartial third party depositary of escrowed instruments and other documents, holding them until occurrence of a specified event, at which time the agent makes disbursement or delivery in accordance with the parties' instructions.  See Smith v. Daniel, 288 S.W. 528, 531 (Tex. Civ. App.—Beaumont 1926, writ dism’d); Hudgins v. Krawetz, 558 S.W.2d 131, 133-34 (Tex. Civ. App.— San Antonio 1977, no writ); Bell v. Safeco Title Ins. Co., 830 S.W.2d 157, 161 (Tex. App. – Dallas 1992, writ denied).
http://www.gdhm.com/wp-content/uploads/2016/08/rdy-chpt_38_escrow_agent_liability.pdf

8 Am. Jur. Legal Forms 2d § 100:3 Form Drafting Guide "For there to be an escrow, there must be a contract between the parties. An escrow relationship is essentially a three-party contract that arises in the first instance by an agreement between two parties concerning the delivery of an instrument upon the occurrence of a specified future condition; in the absence of such a tripartite contractual arrangement, the special duties of escrow agent do not attach to the third party in possession of the instrument. However, the escrow document is not a substitute for the original contract between the parties but is merely an auxiliary instrument created to help implement or execute the primary agreement. The failure of the principal parties to reach an agreement precludes the placement of money or an instrument in the hands of the third party from being an escrow."


However--you say that the Sellers' signed deed was "put [] into escrow **here at our office**."
This phrase bothers me.
Because you are attorney for the Sellers, you are their agent for whatever purposes your clients intend. 
Surely one of Sellers' intentions in this transaction must be to pass title to property, upon performance of contract terms and conditions.
In that transaction you effectuate Sellers' will. You act as much more than a mere ministerial, third-party passer of title.
And as Seller's attorney you cannot also hold privity of contract with the Buyer (absent written consent by all parties).

Troendle v. Hanson, 570 N.W.2d 753 (Iowa 1997):
"First, the rule that a client must suffer the consequences or reap the benefits of his or her attorney's decisions is a well-established principle of agency law. See State v. LaMar, 224 N.W.2d 252, 254 (Iowa 1974) (“It is the general rule that a client is bound by the acts of his attorney within the scope of the latter's authority.”); 7 Am.Jur.2d Attorneys at Law § 147, at 196–97 (1997) (“Where the relation of attorney and client exists, the client is bound by the acts of his or her attorney within the scope of the latter's authority ....”); id. § 157, at 202 (setting forth general rule “that the acts and omissions of an attorney acting within the scope of his or her authority are regarded as the acts of the person he or she represents”). See generally Dillon v. City of Davenport, 366 N.W.2d 918, 923 (Iowa 1985) (holding relationship of client and attorney is one of principal and agent). This rule has broad application, permeating all aspects of the attorney/client relationship..."

Darling v. Nineteen-Eighty Corp., 176 N.W.2d 765 (Iowa 1970):
"Defendants insist Robinson was an escrow agent from the moment he transmitted *769 the documents and said in the letter, ‘said deed will be held by us in escrow pending final payment on the contract of sale.’ These words contemplate (1) an escrow agency after the contract is made and (2) for the single purpose of holding the deed pending final payment. Defendants make more out of the planned escrow arrangement than we are willing to ascribe to it.
"Belin knew he was dealing with the property owner's agent. The agent was not authorized to bind his principal and defendants don't claim the agent did so, or even attempted to do so. Darling's act in forwarding the papers to his own agent did not constitute an acceptance until delivery to the vendee was actually accomplished. Until that time Darling had a right to change his mind. This is what happened. His motives are immaterial. The final commitment had not been made."

Hickman & Wells v. McDonald, 164 Iowa 50, 145 N.W. 322 (1914):
"An attorney is necessarily an agent. Agency inheres in his relation to his client. The plaintiffs were not divested of their character as attorneys, nor did they terminate their relationship as such, by reason of their attempt to accomplish a settlement. Granted that they could not compromise their client's claim without express authority, they were bound nevertheless to serve the interest of their client to the best of their ability, even to recommending a settlement, whether authorized to make it or not."

The American Bar Association issued an "Informal Opinion 923" dealing with the question of seller's attorney serving as escrow agent.
Opinion appears to bear issue date of April 26, 1966. I cannot find this document on the interwebs. 
But the bits of it that Westlaw will reveal suggest that the ABA takes a cautionary view of this practice. 
Ethical conflicts inhere rather easily, when the attorney straddles the Seller-Buyer relationship.

Here's a Minnesota Office of Lawyers' Professional Responsibility article citing and quoting a piece of IO 923:
http://lprb.mncourts.gov/articles/Articles/Attorney%20as%20Escrow%20Agent.pdf

The deed remains in your hands. Ergo, IMHO Sellers still effectively, personally hold the deed as though never delivered.
Again IMHO, attempted escrow is ineffective.  You as Seller's agent are not, and cannot be, a neutral third party deed holder.
Maybe my opinion is a bit fossilized.  Some states' law does appear to loosen a bit, in recent years. So says Am.Jur, anyway.

28 Am. Jur. 2d Escrow § 20
§ 20. Agent or attorney of grantor or obligor "Originally, it was the established rule that the deposit of instruments in escrow could not be made with a person who was the agent of either of the parties to the instrument because if the depositary was the agent of the grantor, the instrument was retained by the grantor; if he or she was the agent of the grantee, the instrument was deemed delivered.1 Thus, a deed could not be delivered to the agent or attorney of the grantor because its possession by the agent or attorney was deemed the possession of his principal and recoverable by him or her.2 "The more recent view is that the agent or attorney of the grantor may act as the depositary of the escrow if there is no violation of his or her duty to the principal and the person acts as an individual, not as an agent.3
FN1 Brown v. Brown, 192 Ga. 852, 16 S.E.2d 853 (1941); Nickell v. Reser, 143 Kan. 831, 57 P.2d 101 (1936); Johnson v. Freytag, 338 S.W.2d 257 (Tex. Civ. App. Beaumont 1960), writ refused n.r.e., (Jan. 18, 1961).
FN2 Brown v. Brown, 192 Ga. 852, 16 S.E.2d 853 (1941); Nickell v. Reser, 143 Kan. 831, 57 P.2d 101 (1936); Johnson v. Freytag, 338 S.W.2d 257 (Tex. Civ. App. Beaumont 1960), writ refused n.r.e., (Jan. 18, 1961); Heck v. Morgan, 88 W. Va. 102, 106 S.E. 413 (1921).
FN3 Progressive Iron Works Realty Corp. v. Eastern Mill. Co., 155 Me. 16, 150 A.2d 760 (1959); Casolaro v. Blau, 4 Misc. 2d 206, 158 N.Y.S.2d 589 (Sup 1956); Snodgrass v. Thomson, 1949 OK 227, 202 Okla. 209, 211 P.2d 521 (1949).
There is no rule of law that prevents an attorney of law from becoming depositary of an escrow of which his client is the grantor. McGriff v. McGriff, 48 Ohio L. Abs. 218, 74 N.E.2d 619 (Ct. App. 2d Dist. Darke County 1947).

I'll presume that your escrow position is ethically valid.
But I'd still recommend that a trustee's clearance deed be conveyed along with the Sellers' escrowed deed.

David Hanson
Hofmeyer & Hanson PC
Fayette, Iowa



----- Original Message -----
From: "Andy Lemmenes" <realestate@iabar.org>
To: realestate@iabar.org
Sent: Friday, May 18, 2018 10:02:21 AM
Subject: [ISBA RealEstate]  assignment of vendor's interest in installment contract to vendor's revocable trust

Hi everyone!

I have a question involving an assignment of vendor's interest in an installment contract to vendor's revocable trust.

About a year ago, we helped Sellers sell their farm on contract to Buyers.  At that time, we had Sellers sign a deed and put it into escrow here at our office.  Since then, Sellers have set up a revocable trust and now wish to assign all their rights in said contract to their trust.

We have drafted an Assignment of Real Estate Contract from Sellers to the trustees of their trust, which we plan to file.  Will this be sufficient, or will we also need to draft a new deed from Trustees to Buyers to hold in escrow?

Any thoughts would be much appreciated.  Thanks!

Andy Lemmenes
Baker, Johnsen, Sandblom & Lemmenes
30 North 8th Street
PO Box 337
Humboldt, IA 50548
Phone: 515-332-1157
Fax: 515-332-5785

This message is confidential and privileged and is being transmitted to you pursuant to the privileged communications doctrine of the attorney-client work product privilege.  It may not be used or disclosed by any person other than its addressee(s).  If received in error, please contact the sender.  This message and any attachments have been scanned and are believed to be free of any virus or other defect.  However, as with all email messages and attachments, you should check each to make certain that it is virus free.  Baker, Johnsen, Sandblom & Lemmenes is not responsible for any loss or damage arising from use of this message.  Please contact info@humboldtlaw.com<mailto:info@humboldtlaw.com> if you need assistance.