What is considered wrongful delivery by the escrowee?

Wrongful delivery by the escrowee primarily refers to actions that violate the terms set in the escrow agreement or the underlying purchase and sale agreement (PSA). In this context, the correct answer highlights a situation where a deed is delivered before all conditions of the PSA are satisfied.

In real estate transactions, escrow serves as a neutral third party that holds documents and funds until all parties fulfill their obligations as outlined in the PSA. If the escrowee delivers the deed prematurely—prior to all conditions being met—this can cause significant issues, such as transferring ownership before the buyer has fulfilled obligations like securing financing or completing inspections. Such a premature action can lead to disputes or even invalidate the transaction, as it does not align with the agreed-upon conditions.

The other choices involve scenarios that do not specifically constitute wrongful delivery. Losing a deed during the escrow period does indeed create complications but does not inherently reflect a wrongful delivery—it's more indicative of a mismanagement issue. Meanwhile, if both parties agree to change the conditions of delivery, this indicates a mutual modification of the terms, which can be acceptable as long as it aligns with their agreement. Lastly, not following the escrow instructions directly corresponds to the responsibilities of the escrowee, but it does not specifically define