Duhaime's Law Dictionary

Double Escrow Definition:

The secret use of escrow funds with those of another escrow fund, for the purposes of financial gain by the holder of the escrow funds, and without the knowledge of the owners of the two funds.

Related Terms: Escrow

Justice McDaniel of the Supreme Court of Nevada, in Alley v Nevada Real Estate Division, defined double escrow and then went on to explain the law's denonciation of such schemes:

"In a double escrow, the broker or salesman purchases a principal's property in the first escrow, and sells it to a third party at a profit in a second escrow without a full disclosure to both the principal and the third party. The escrows close at the same time and the broker or salesman thereby uses the proceeds from the sale in the second escrow to purchase his principal's property. The broker or salesman receives a commission on the sale in the first escrow and a secret profit on the closing in the second escrow.

"Such schemes (are) denounced .... A broker when pursuing his own interest cannot ignore those of his principal and will not be permitted to enjoy the fruits of an advantage taken of a fiduciary relationship, whose dominant characteristic is the confidence reposed by one in another. The law does not allow the agent who also has a right to purchase to wait until someone makes an offer of an amount in excess of the agreed purchase price and then elect to purchase the property at the lesser price without informing the owner of the higher offer, and, after the agent has obtained the consent from the owner to buy the property, then immediately sell it for the higher price as his own property."

Similarly, in the same court, a decade earlier, Justice Mowbray presiding, rebiewed the conduct of Grant Holland of Las Vegas:

"Factually, Holland engaged in what is euphemistically termed in real estate transactions as double escrowing. There were two transactions. In one escrow he purchased a residential home from the true owner (Edwards) for $3500 and sold the home in the second escrow to the true buyer (Jeppson) for $4500, retaining for himself the $1000 difference less the cost of the two escrows. Upon close of the escrows, Holland, without buyer's or seller's knowledge, arranged that sufficient moneys deposited in the buyer's (Jeppson's) escrow be transferred to the seller's (Edwards') escrow to complete the Edwards escrow. Both escrows were opened either on the same or consecutive days. Both escrows closed simultaneously.

"The parties have admitted that at no time did Holland advise the buyer that he was acting for himself."1


  • Alley v. Nevada Real Estate Division, 575 P. 2d 1334 (1978)
  • Holland Realty Investment Co. v. State of Nevada, 436 P. 2d 422 (1968; Note 1)

Categories & Topics:

Always looking up definitions? Save time with our search provider (modern browsers only)

If you find an error or omission in Duhaime's Law Dictionary, or if you have suggestion for a legal term, we'd love to hear from you!