Let's talk about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is hired to assure your place closes on time and the process goes smoothly. A property is said to be in escrow when in the closing transaction, payment is held by a third party on behalf of two parties when the exchange of money takes place. An easy way to think of what an escrow company does is to compare it to PayPal for Internet purchases.
The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's contract are completed prior to the sale being finalized. This includes securing monies and documents, signing required forms, and obtaining the release documents for any loans or liens that have been paid with the transaction, assuring you have a free title to your home before the negotiated price is fully paid.
These are the legal forms that escrow companies usually compile:
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
Upon completion of all portions of the escrow, closing can take place. At this time, all payments and dues for inspections, title insurance and real estate commissions are collected. The house's title is given to you and title insurance is issued per the steps of your individual escrow process.
When closing is in it's last step, you'll submit a payment to the escrow holder. As your agent, I'll inform you of the acceptable form of payment.