In a nutshell, an escrow is a deposit of funds, or a deed, by one party for the delivery to another party upon completion of a specific condition or event. It is a neutral third party protecting the interests of all parties in the transaction.
The open escrow is a “storehouse” for all monies, instructions, and documents necessary for the sale of a home. This includes the buyer providing funds for a down payment, and the seller depositing the deed and any other required papers.
WHY DO I NEED AN ESCROW?
An escrow account will guarantee that no funds or property change hands until ALL of the terms and conditions are met. The escrow holder carries the responsibility to watch over any funds or documents. They will then pay out the funds and/or transfer the title when all requirements have been met.
HOW DO I OPEN ESCROW?
Generally, the buyer or seller’s real estate agent will open the escrow. As soon the purchase agreement is complete, the agent will place the buyer’s initial deposit, if any, into the escrow account.
HOW LONG IS AN ESCROW?
The length is determined from open to close by the terms of the purchase agreement. This can range from a few days to several months.
WHAT IS AN ESCROW CLOSING?
An escrow closing is the climax of the transaction. It signifies the legal transfer of title from the seller to the buyer. Generally, the Grant Deed records within one working day of the escrow holder’s receipt of loan funds.
Once all the conditions have been satisfied, the escrow officer informs the agent of the date escrow will close. They then take care of the technical and financial details. The escrow officer verifies with the County Records Office that the documents have been recorded and the legal transfer has occurred.
HOW DOES THE ESCROW PROCESS WORK?
The buyer, seller, lender and/or borrower cause escrow instructions to be created, signed and delivered to the escrow officer.
Prior to close of escrow, the buyer deposits the funds required with the escrow holder. The buyer instructs the escrow holder to release the money to the seller when the deed records. A policy of title insurance will be prepared and delivered to the buyer.
Escrow cannot be completed until the instructions have been fully satisfied and all parties have signed escrow documents. When all conditions required in the escrow are met, the escrow is “closed”.
WHAT ARE THE DUTIES OF THE ESCROW HOLDER AGAIN?
- Manages the funds and/or documents in accordance with instructions
- Pays all bills as authorized
- Responds to requests from the principals
- Closes the escrow only when all terms and conditions have been met
- Distributes the funds accordingly
WHAT DO I NEED TO DO BEFORE MY APPOINTMENT TO SIGN MY ESCROW PAPERS?
All parties signing the documents must bring proper identification. Bring either a valid driver’s license, state identification card or current passport to the title company. This item is needed to verify your identity by a notary public. This is a routine, but necessary step for protection.
WHAT’S THE NEXT STEP AFTER I’VE SIGNED THE CLOSING ESCROW PAPERS?
After both parties have signed all the necessary instructions and documents, the escrow officer will return 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.
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