Escrow Terms

A Glossary of Commonly Used Internet Escrow Terms

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Clause used in an installment note and mortgage (or deed of trust), which gives the lender the right to demand payment in full upon the happening of a certain event, such as failure to pay an installment by a certain date, change of ownership without the lender’s consent, destruction of the property, or other event which endangers the security of the loan.

A written declaration by a person executing an instrument, given before an officer authorized to give an oath (usually a notary public), stating that the execution is of his own volition.

A person who makes an affidavit.

A written statement or declaration, sworn to before an officer who has authority to administer an oath.

One who is authorized to act for or represent another (principal), usually in business matters. Authority may be expressed or implied.

A person who acts for another by proper authorization.

An opinion of value based upon a factual analysis.

An agent authorized to act for another under a “Power-of-Attorney”.


An instrument by which one transfers title to personal property.

One who acts as an agent for another in negotiating sales or purchases in return for a fee or commission.

One who purchases or acquires property.


Where the seller, processor, buyer, and broker(s) complete all terms of the escrow instructions and funds held in trust are distributed.

A general term to describe the fees that escrow participants will pay at closing. These costs are sometimes called “settlement fees.”

Something pledged as security for repayment of a loan, to be forfeited in the event of default.

A future event or circumstance which is possible but cannot be predicted with certainty.


Failure to fulfill and obligation as set forth in MOU or escrow instructions.

Money given by the buyer with an offer to purchase. Shows good faith. Also called earnest money. 

A written document used when accepting a deposit or “earnest money” from parties to an escrow.


A claim, lien, charge or liability attached to and binding property, real or personal.

Delivery of a deed by a grantor to a third party for delivery to the grantee upon the happening of a contingent event. Contemporarily, in some states, all instruments necessary to the sale (including funds) are delivered to a third (neutral) party, with instructions as to their use.

Instructions which are signed by both buyer and seller, and which enable an escrow agent to carry out the procedures, necessary to transfer real property, a business, personal property, or other assignable interest. If there is a processor (lab) involved as an additional party to the escrow, they will also sign the escrow instructions.


One who holds a position of trust and confidence, such as an escrow agent.

A deception, intended to wrongfully obtain money or property from the reliance of another on the deceptive statements or acts, believing them to be true.


Security or protection against a loss or other financial burden.


A LOI is a document that outlines the basic terms of a deal. Mostly, it will include a list of the parties involved (the nodes), a description of the goods to be sold (i.e.  hemp biomass or CBD), their price, and the timing.

The right to maintain a security position in real or personal property until a debt is discharged.

A definite amount of damages, set forth in a contract, to be paid by the party breaching the contract. A predetermined estimate of actual damages from a breach.


A mechanic’s lien is a legal claim for unpaid construction work.  When a contractor files a mechanic’s lien, they gain a security interest in the home or property.  The lien clouds the real estate title, making it difficult for the homeowner or property owner to sell it until the lien claim is paid.

A memorandum of understanding (MOU) serves a similar function as a LOI. However, a LOI is non-binding. It is not a contract. A MOU is a binding contract and can be the basis for a lawsuit if its terms are breached.


Think of a biomass or CBD deal as a “circuit” composed of “nodes”. The circuit itself can be thought of as representing the deal, with each of the nodes representing various players in the deal. At each end of the circuit are the “terminal nodes”, meaning the actual buyer and the actual seller. The terminal buyer is the person, entity, or collective that is actually paying money. It is one of the terminal nodes. On the other end of the circuit is the actual seller, which is the terminal node that is the person, entity, or collective that is actually in possession and control of the biomass or CBD that is being sold. In between are any number of non-terminal nodes, which we refer to as “brokers”.

This agreement should be signed by every person with whom the broker interacts in the deal before any substantive business is discussed. A NDNCA will provide some protection to the broker that she will not be circumvented. This, in turn, will enable her (and the other broker nodes in the circuit) to seek and reveal sufficient information to keep the circuit open.

A written acknowledgement of a debt by a borrower including a promise of payment in accordance with specific terms.

A notice, provided to show that a contractual obligation is finished.


A voluntary association of two or more persons to carry on as co-owners of a business for profit.

Property which is not real property, such as biomass, isolate, and consumer products.

A document authorizing another to act on one’s behalf as his agent.

One who employs an agent to act on his behalf, such as the seller and buyer in an escrow transaction.

With a three-party escrow – seller(grower), laboratory, and buyer, the processor is the lab that converts hemp biomass to CBD isolate or distillate.

Where the buyer proves to the seller that she has the funds to consummate the deal and the seller proves to the buyer that he has the goods to sell. The buyer provides “proof of funds”, which is a document of some sort evidencing the buyer’s financial position. The seller demonstrates that he has the biomass or CBD to sell. This can be pictures, letters, or even videos. Occasionally, the terminal seller will allow the buyer (or the buyer’s agents and brokers) to visit the laboratory or farm where the product is being manufactured or stored.

To allocate, distribute, or assess proportionally.


One who sells property to another or others – known as the buyer(s).


A financing statement (Form UCC1) is filed to perfect a security interest in named collateral and establishes priority in case of debtor default or bankruptcy.


Local governmental regulations relating to the use of real property.

Now that you know the lingo...