WHAT IS ESCROW
In a real property transaction, Escrow is the delivery by the buyer and seller of legal instruments and money to a third person who completes the transaction in strict accordance with the instructions of the parties.
WHY USE ESCROW
Escrows provide a mechanism to assure safety and convenience in carrying out the provisions of an earnest money agreement, and to assure that the rigid body of rules peculiar to real property transfers is carefully observed.
WHO PAYS ESCROW FEES
The escrow fee is usually split between the buyer and seller, but this can be changed by agreement of the parties.
HOW DOES THE SELLER BENEFIT FROM AN ESCROW
The seller is assured that the transaction will be properly and promptly closed. Specially trained personnel will see that every detail of the instructions are carefully followed, and that title will not pass to the buyer until the purchase prices is fully paid, or the seller's provision as to security for unpaid balances is fulfilled. If the seller intends to use part of the purchase price to satisfy liens on the property, the escrow provides an efficient method for paying off the lien holder.
HOW DOES THE BUYER BENEFIT FROM AN ESCROW
The buyer is assured that the transaction will be closed in accordance with buyer's instruction, and that the funds will not be paid to the seller until the transaction is properly completed. If the buyer needs to use the property as security for a loan to pay part of the purchase price, the escrow guarantees the lender that title is exactly as required, and provides a safe method for delivery of loan proceeds or security documents.
WHAT SERVICES DOES AN ESCROW AGENT PERFORM
Prepares the necessary instructions from the buyer and seller
Receives the necessary documents and funds
Pro-rates interest on liens to be assumed
Pro-rates and obtains endorsement of existing fire insurance policies when requested by a lender or a party to the escrow
Clears checks deposited by the purchaser through banking channels
Obtains title insurance for protection of buyer and lender
Closes the transaction when instructions of the buyer and seller can be satisfied by recording legal documents and disbursing funds
Pays liens and costs authorized by parties
Furnishes each party with a closing statement showing disposition of funds in the transaction