Detailed Answer

Short answer: In Connecticut, funds held in trust (often called escrow funds) generally should not be released until the closing conditions in the escrow instructions are satisfied. If one of those conditions is recording the deed, the escrow agent or closing attorney normally holds funds until the deed is recorded or until the parties provide a written agreement or a court order allowing release.

Why recording matters

Recording a deed protects the buyer’s ownership rights in the public land records and gives constructive notice to third parties. If the deed has not been recorded, the buyer risks that a later claimant (creditor, subsequent purchaser, or judgment creditor) might assert an interest that could affect title. For that reason, escrow instructions and most title insurers require recording before the escrow agent releases funds to the seller.

Who controls the funds?

Funds placed with an escrow agent, closing attorney, or title company are governed by the written escrow instructions, the purchase and sale agreement, and any applicable rules of professional conduct or licensing rules for closing agents. In Connecticut, closing attorneys and title agents commonly follow the parties’ escrow instructions; they may also seek direction from a court if the parties disagree.

When funds can be released before recording

Release of trust funds before the deed is recorded can happen, but only in limited circumstances:

• Mutual written agreement: If buyer and seller (and any lender) sign a written waiver or agreement authorizing release despite non-recording, the escrow agent can follow those instructions.
• Escrow instructions with alternative trigger: The escrow instructions sometimes specify an alternate trigger (for example, release after the deed is delivered to the recorder’s office for filing, or after a specified number of days if recording is delayed for reasons beyond the parties’ control).
• Title insurance or closing assurances: If the title insurer or closing attorney provides a mechanism that protects the buyer’s interest (for example, by issuing interim coverage or an indemnity), the escrow agent may have grounds to release funds earlier under the written escrow terms.
• Court order or interpleader: Where there is a dispute (for example, seller refuses to deliver a recorded deed), the escrow agent may deposit funds with the court (interpleader) or obtain a court order directing release. A Connecticut court can sort claims and order distribution of escrow funds.

When you should not agree to release funds

Do not authorize release if:

• The seller refuses to deliver a properly executed deed or clear title.
• Recording was delayed and the escrow instructions required recording as the release condition.
• There is any doubt about liens, judgments, or competing claims on the property.

Practical steps if the deed isn’t recorded but someone demands release

1. Review the purchase and sale agreement and the escrow instructions to see the release conditions.
2. Confirm the reason for non-recording (clerical delay, missing signature, title defect, payoff hold-up, etc.).
3. Ask the escrow agent for their written position and for copies of any communications with the title insurer or lender.
4. If you are the buyer, require written assurances (or title insurance protection) before agreeing to release funds.
5. If you are the escrow agent and parties disagree, consider interpleader or asking a court for instructions rather than choosing a side.

Relevant Connecticut authorities and resources

Connecticut statutes and state resources relevant to recording and property include the Connecticut General Assembly’s property statutes and the Judicial Branch land records portal. These resources explain recording rules and how documents become part of the public record:

• Connecticut General Statutes, Title 47 (Property): https://www.cga.ct.gov/current/title_47.htm
• Connecticut Judicial Branch — Land Records system: https://www.jud.ct.gov/landrecords/

Common remedies when recording is delayed or withheld

• Demand performance: Send a written demand that the seller record the deed and deliver proof to the escrow agent.
• Title insurance claim: If a title insurer agreed to insure, open a claim to protect the buyer’s interests.
• Lawsuit for specific performance or breach: Ask a court to require the seller to execute and record the deed and to order damages if appropriate.
• Interpleader or court instructions: If the escrow agent faces conflicting claims, file an interpleader or petition the court for instructions on distribution.

Bottom line: In Connecticut, escrow funds should generally remain in trust until the written conditions for release are met—often including recording the deed. Releasing funds before recording is possible only when the parties’ written instructions, title insurer protection, or a court order authorize it. If you face this situation, preserve written records and consult a Connecticut real estate attorney to protect your interests.

Disclaimer

This article is educational only and is not legal advice. It does not create an attorney-client relationship. For advice about your specific situation, consult a licensed Connecticut real estate attorney.

Helpful Hints

• Always keep the original escrow instructions and purchase contract handy — these documents control distribution of funds.
• Insist on written confirmations. Do not rely on oral promises about recording or release of funds.
• If the deed is delayed, get a written explanation and a timetable for recording from the party responsible.
• Ask whether title insurance will be effective if funds are released early, and get any insurer’s assurances in writing.
• If you are an escrow agent unsure how to proceed amid a dispute, seek a court order or file an interpleader to avoid liability for wrongful disbursement.
• Keep copies of all checks, wire confirmations, payoff statements, and communications with the title company or lender in case you need to prove how funds were handled.