What is required for a true escrow to be created?

To establish a true escrow, it is essential that it be based on an enforceable Purchase and Sale Agreement (PSA). This requirement ensures that there is a legally binding contract that outlines the terms of the transaction, including the obligations of all parties involved and the specific conditions under which the escrow will operate. The PSA serves as a foundational document that clarifies the intent of the parties, thereby providing the necessary legal framework for the escrow process.

Without an enforceable PSA, the terms of the escrow may not be clearly defined or legally supported, leading to potential disputes or unenforceability in a court of law. A well-drafted PSA is therefore crucial for the validity of an escrow arrangement.

The other options do not meet the necessary criteria for establishing a true escrow. For instance, a revocable agreement or a verbal agreement lacks the permanence and formal documentation required to secure the specific obligations of the parties. Furthermore, while gift escrows may exist, they do not serve the same legal purpose as escrows created for real estate transactions that rely on a binding PSA.