What type of relationship does an escrow agent have with the principals involved in a transaction?

An escrow agent has a limited agency relationship with the principals involved in a transaction. This means that the escrow agent is entrusted with certain duties and responsibilities, specifically related to the handling of the funds and documents during the escrow process. However, this relationship does not grant the escrow agent the authority to represent either party fully or to make decisions on their behalf beyond the specific terms of the escrow agreement.

In a limited agency, the agent acts with a specific scope that is predetermined by the principals—essentially following their instructions while ensuring that the transaction proceeds smoothly and fairly. This aligns with the role of an escrow agent, who is responsible for holding and disbursing funds, ensuring that contractual obligations are met, and facilitating communication between the parties involved without taking sides or advocating for one party over the other.

In contrast, an independent contractor relationship suggests a greater degree of autonomy with less obligation to any party, which does not capture the responsibilities of an escrow agent. Full agency would entail broader powers, including the ability to act on behalf of another party in various matters, which goes beyond the limited scope of an escrow agent's role. Lastly, general representation implies a much more comprehensive relationship that involves providing wider-ranging services, which is not applicable to the specific functions of