Escrow And The Way It Works

Buying or selling a home (or other piece of real property) usually involves the transfer of large sums of money. It is Important that the transfer of these funds and related documents from one party to another be handled in a neutral, secure and knowledgeable manner. For the protection of buyer, seller and lender, the escrow process was developed. As a buyer or seller, you want to be certain all conditions of sale have been met before property and money change hands. In part escrow functions work like well oiled machine. One party engages in the sale, transfer or lease of real or personal property with another person delivers a written instrument, money or other items of value to a neutral third person, called an escrow agent or escrow holder. The third party (the escrow officer) waits for the completion of a specified event or the performance of a specified condition to finally disperse money or other items.The escrow holder responsibilities are to carry out the written instructions given by the principals. This means receiving funds and documents necessary to comply with those instructions, completing or obtaining required forms and handling final delivery of all items to the proper parties upon the successful completion of the escrow. In order for escrow to close successfully all documents need to place in the escrow holder care. This includes loan documents, tax statements, fire and other insurance policies, title insurance policies, terms of sale and any seller-assisted financing, and requests for payment for various services to be paid out of escrow funds. If the transaction requires new financing it is the buyer or the buyer’s agent to make the necessary arrangements. Documentation of the new loan agreement must be in the hands of the escrow holder before the transfer of property can take place. Once all instructions in the escrow have been carried out, the closing can take place. For example all outstanding funds are collected and fees such as real estate commissions, termite inspection title insurance premiums are paid. Finally when closing sellers and buyers should stay in close contact with their realtor to make sure all instruction are being met during escrow.