WHAT IS ESCROW?
Escrow is the depositing of funds and documents that establish the terms and conditions for the transfer of property ownership with an impartial third party (Title365) for delivery upon completion of the terms of the escrow instruction. When the parties deliver documents and money to the impartial escrow holder to be held for further delivery until certain conditions have been met, we say the documents are held “in escrow”. We may also say the parties have “opened an escrow”. Each of the principals of the escrow (Seller, Buyer, Lender) will give to the escrow holder written instructions setting out the conditions under which the further delivery is to be made. The purpose of an escrow. The common use of an escrow is to enable the parties in a real estate transaction to deal with each other with less risk, since the escrow holder acts as:
• Custodian for funds and documents.
• A clearing house for payment of all demands.
• An agency to perform the clerical details for the settlement of the accounts between the parties.
TYPICAL ESCROW TRANSACTION.
An escrow begins with the Realtor® opening the order for title work and providing the Purchase Agreement and all executed documentation to escrow. Once received, Title365 prepares a preliminary report. Upon receipt of the preliminary report, an analysis is made to determine the necessary action and documents required to complete the transaction:
• Demands for satisfaction of liens not acceptable to Buyer and/or Lender.
• Documents for recording.
• Instructions and requirements of the new Lender. In most areas, Buyer and Seller instructions are prepared for signature from the information gathered. When all the title and financial requirements are met and instructions from all parties can be fully complied with, the escrow is said to be “in perfection” and can close. Once the financial settlement takes place, documents are recorded and the title insurance policies are then issued.