What Is Escrow

Escrow is the legal procedure used to transfer the title to real property. This term is often times unfamiliar to homebuyers. Escrow is used to reduce the risk of fraud by acting as a Third party that collects, holds, and distributes funds according to the instructions of the buyers and the sellers.
Escrow is opened when the buyers and the sellers have reached an agreement on price and terms and are ready to make a deal. Once all parties have signed that document escrow is ready to open. Escrow can stay open for long periods of time or just a few days depending on the complexity of the deal. The person who opens the escrow is the selling agent.
One to two days after the open of escrow the escrow instructions are prepared and they are ready to be signed by the parties. The instructions included the purchase price, the terms, vesting, and matters of record, closing, inspections, perorations, possession, documents, and disbursements.
After the opening of escrow it is the job of the escrow officer to order a title report from a title company. The title company prepares a preliminary report then searches for any encumbrances of liens against the property. They also check to see if the seller is on record, and inspections the chain of title. After its preparation the buyer is allowed a few days to approve of the findings.
Once this is in place the escrow officer must make sure all existing loans are paid off, or assumed. He sends a request for payoff demands to the beneficiary, the bank. The beneficiary statements also describe the condign of the debt and the unpaid balance of the loan. After close examination of the deal the escrow officer follows the instructions for financing the property, then prepares the proper papers to get the deal closed. This could be a trust deed, a note, or assumption papers.
Other reports may be ordered in the escrow process. The escrow officer is asked to hold all reports in escrow.
At the close of escrow the escrow officer must audit each file. He makes sure that all the accounting is correct, and that the instructions have been followed. A closing statement is completed by the escrow holder and the closing statements are prepared.
The escrow officer then orders the title company to record the documents as instructed by the buyer and the seller. The Title Company then issues a policy of title insure ace to insure the buyers title.
The last job of the escrow officer is to close the escrow. The officer gives the buyer and seller closing documents, distributes all monies and delivers the proper paper word to the parties. The buyer gets the grant deed and the seller gets a check for the sale of the property.
Escrow is a term that your Realtor should be very familiar with and will help you with any questions or concerns.