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Equal Housing
Opportunity
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Did You
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A move for job
purposes may be tax deductible?..consult your accountant.
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About Escrow
Definition of Escrow:
Escrow is an independent neutral account for deposit of funds, a deed or other instrument by one party for the delivery to another party upon
completion of a specific condition or event. The escrow account protects the interests of all parties involved.
When opening an escrow, the buyer and seller of a piece of real estate property establish the terms and conditions for transfer of ownership.
The terms and conditions set out are given to a third, impartial party empowered to make sure all the terms and conditions are met. This third
party is known as as the escrow holder.
The escrow is for all monies, instructions and documents needed for the sale and transfer of the property. This includes the buyer providing funds for a
down payment, and the seller depositing the deed and all necessary papers for transfer of ownership.
Why is an escrow needed?
An escrow provides all parties involved with a guarantee that no funds or property will change hands until ALL of the terms and conditions have been met.
The escrow holder's responsibility is to watch over the funds and/or documents and then disburse the funds and/or transfer the title after all
requirements of the escrow have been satisfactorily completed.
How Does the Escrow Process Work?
The borrower, seller and lender create the escrow instructions, sign and deliver them to the escrow officer. The escrow officer processes the escrow,
in accordance with the escrow instructions. When all conditions required in the escrow instructions are completed, the escrow is "closed."
Prior to close of escrow, the buyer deposits the funds required with the escrow holder. The escrow holder then releases the money to the
seller only after:
- The deed records
- A policy of title insurance is prepared and delivered to the buyer
The escrow holder essentially is acting for all parties involved and protects each according to the power of the escrow instructions. Escrow cannot be
completed until all instructions are fully met and all parties have signed the escrow documents. The escrow holder takes instructions based on the
terms of the agreements, contract and the lender's requirements.
The duties of the escrow holder include:
- Managing the funds and/or documents in accordance with instructions;
- Paying all bills as authorized;
- Responding to principals requests;
- Closing escrow after all the terms and conditions set out have been completed;
- Distributing the funds according to the terms set out in the escrow;
How is an escrow opened?
Normally, the seller's real estate agent will open escrow. As soon as the purchase agreement is completed, the selling agent will place the buyer's
initial deposit, if any, into the escrow account at a title company or into the real estate broker's account.
What Do I Need for signing Escrow Papers?
All parties signing must have proper identification. This can be a valid driver's license, state identification card or valid passport.
Bring these with you to the title company. Your identity must be verified by a notary public. This is a routine, but necessary step for every party involved
to be protected.
What happens after the closing of the escrow papers?
After all the papers determining all the necessary instructions and documents have been signed by both parties, the escrow officer will send the buyer's
loan documents to the lender for final review. After the review is completed, the lender is ready to fund the buyer's loan and informs the escrow officer.
How Long does an Escrow last?
The length is determined by the terms and conditions of the purchase agreement and can range from days to months.
What is the "Escrow Closing"?
The escrow closing is finality of the transaction. It the completion of the legal transfer of title from the seller to the buyer.
Usually, the Grant Deed of Trust is recorded within one working day of the escrow holder's receipt of loan funds. This completes the transaction and
signals the "close of escrow."
When all the conditions of the escrow have been completed, the escrow officer informs you or your agent of the date escrow will close and takes care of the
final details. The final closing papers are distributed when escrow closes and after the escrow officer verifies with the County Records Office
that the documents have recorded and legal transfer has occurred.
Rick Lockwood, Realtor® Century 21 HS & Associates
(512) 635-2691 - rick@lockwoodgroup.com
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