The Escrow process was developed for the protection of the buyer, seller and lender. Buying or selling a home involves the transfer of large sums of money. All parties involved want to be certain that all conditions of sale have been met before property and currency change hands.

ESCROW: a transaction where one party engaged in the sale, transfer or lease of real or personal property with another party delivers a written instrument, money or other items of value to a neutral third person, called an Escrow Agent or Escrow Holder. This Escrow Agent/Holder holds the money or items for disbursement upon the happening of a specified event or the performance of a specified condition.

Simply stated, the Escrow Holder impartially carries out the written instructions given by the principals of the transaction. This includes receiving funds/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.

The escrow agent must be provided with the necessary information to close the transaction. This may include 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.

When all the instructions in the escrow have been carried out, the closing can take place. At this time, all outstanding funds are collected and fees, such as title insurance premiums, real estate commissions, etc, are paid. Title to the property is then transferred under the terms of the escrow instructions and appropriate title insurance is issued.

Payment of funds at the close of escrow should be in the form acceptable to the escrow.

The following items represent a typical list of what an escrow holder does and does not do:

THE ESCROW HOLDER:

• serves as the neutral "stakeholder" and the communications link to all parties in the transaction;



• prepares escrow instructions;



• requests a preliminary title search to determine the present condition of title to the property;


• requests a beneficiary's statement if debt or obligation is to be taken over by the buyer;


• complies with lender's requirements, specified in the escrow agreement;


• receives purchase funds from the buyer;


• prepares or secures the deed or other documents related to escrow;


• prorates taxes, interest, insurance and rents according to instructions;


• secures releases of all contingencies or other conditions as imposed on any particular escrow;


• records deeds and any other documents as instructed;


• requests issuance of the title insurance policy;


• closes escrow when all the instructions of buyer and seller have been carried out;


• disburses funds as authorized by instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs;

prepares final statements for the parties accounting for the disposition of all funds deposited in escrow.