Why Parties Shouldn’t Use Their Own Lawyers as Escrow Agents: Lessons from a High‑Stakes New York Real Estate Dispute
- Mar 10
- 2 min read
When commercial real estate deals go sideways, the fault lines almost always run along one familiar theme: mistrust. Few recent cases illustrate this better than JTRE 23 WS (Del) LLC v. CS Wall Street LLC (NY County 2026), a long‑running dispute over a triple‑net lease at 23 Wall Street—complete with millions of dollars in construction escrow, stalled buildout work, mechanics’ liens, and a web of interlocking obligations. Yet for all its complexity, one clear lesson emerges: parties should not use themselves or their own lawyers as escrow agents.
In this dispute, the escrow agent (Riverside Abstract) handled a massive pool of money—over $17 million in total escrowed funds at closing, including roughly $9 million earmarked for tenant improvements. The parties spent years fighting over various issues, one of which was whether funds should have been released earlier. Although the parties hurled accusations at each other, neither accused the escrow agent of wrongdoing.
This was because the escrow agent was a neutral third party—not the landlord, not the tenant, and not either side’s lawyer. It simply followed the escrow agreement and held the funds until the required conditions were met. That neutrality insulated it from being dragged into the multi‑year litigation. Had the escrow agent been one of the parties, a principal of one of the parties, or one of the law firms involved, the dispute would almost certainly have expanded into claims of bias, breach of fiduciary duty, or wrongful release (or withholding) of funds.
In this case, the only reason the escrow agent avoided becoming part of a five‑year legal war was because it wasn't tied to either side.