During the escrow process, if an unresolved dispute arises between the seller and the buyer, the escrow holder may legally:

In the context of the escrow process, when a dispute arises between the seller and the buyer that cannot be readily resolved, the escrow holder is often left with the challenge of handling the funds and the transaction details appropriately. Filing an interpleader action in court is a legal procedure that allows the escrow holder to resolve the dispute formally.

By initiating an interpleader action, the escrow holder can bring both parties to court, allowing a judge to determine the rightful recipient of the funds or the appropriate course of action to take. This method is essential because it protects the escrow holder from potential liability that may arise from making unilateral decisions about the escrowed funds. Rather than making a potentially contentious choice that could favor one party over the other, the escrow holder effectively passes the decision-making responsibility to the legal system, ensuring that the resolution is impartial and legally binding.

This process highlights the importance of legal recourse in disputes involving significant transactions, such as real estate deals, where large sums of money are at stake. It also underscores the role of the escrow holder as a neutral third party whose primary goal is to manage the transaction's funds in a way that respects the rights of both the buyer and the seller.