In a typical transaction for the sale and purchase of residential real estate there are two transition periods during which the parties are exposed to risks of sudden significant loss. One risk is of destruction of the premises by fire or other casualty ("realty loss"). Another risk is that money deposited in escrow will be lost through embezzlement or poor caretaking by an escrow holder ("escrow loss"). The two risk periods often overlap, and the two risks clearly are part of the same overall transaction. Because the two types of risk are commonly associated, the theories, doctrines, and rules developed to address allocation of the two risks should be examined in light of one another. It is undesirable to have inconsistencies between the two areas of law unless sound policies are found to dictate otherwise.
Robert L. Flores,
Comparison of the Rules and Rationales for Allocating Risks Arising in Realty Sales Using Executory Sale Contracts and Escrows, A,
59 Mo. L. Rev.
Available at: https://scholarship.law.missouri.edu/mlr/vol59/iss2/2