Buying or selling property requires the transfer and movement of large sums of money.
It’s important that funds and documents are transferred from one party to the other in a neutral, safe and legal way. That’s why the process of escrow is established and developed to protect the buyer, seller and lender.
Whether you’re acting as a buyer or seller, you must ensure that all conditions of the sale are met before the property and money move on into other hands.
The technical definition of escrow is : a neutral party or mediator responsible for the proper performance in the transaction, transfer or lease of a property to another person by delivering a written instrument, money or other items of value to a third neutral person.
This third person holds the money or items for disbursement, when all the specific facts or the execution of a specific condition occurs.
If the transaction depends on the arrangement of new financing then information and documentation of the new loan must be placed into the hands of the escrow agent before the transfer of ownership occurs. A real estate agent can help identify appropriate lending institutions more.
To close the transaction, you must provide the escrow agent with necessary information such as loan documents, state taxes, insurance policies, policies against fire, flood, etc.., if required by the lender, as well as the title insurance policy, the terms of sale and any seller-assisted financing.
At this time, all funds needed to cover the full and absolute payment agreed under the contract must be paid and charges assigned, such as title insurance premium charge, commissions real roots charge, termite inspection, assessment of property, transfer fees, etc., depending on whether you are the buyer or seller in the transaction.
Payments of funds at the close of escrow should be acceptable as personal checks and can cause days of delay in processing the transaction. The title to the property is then transferred under the terms of the escrow instructions and appropriate title insurance is issued.
Things escrow agent can do:
- Enter as “keeper of the interest in question” in a neutral way, and as an intermediary in the communication of all parties involved in the transaction.
- Prepare and write escrow instructions for distribution to all parties involved.
- Responsible for requesting preliminary research to determine the current condition of title to the property.
- Request a statement by the beneficiary in case of debts or obligations that should be taken by buyer.
- Meets the requirements of the lender, which are detailed in the contract agreement.
- Is responsible for receiving funds Buyer to consummate the purchase.
- Prepare, secure and / or writing drafts and other documents related to escrow .
- Responsible for apportioning taxes, interest, insurance and rents according to instructions.
- Disburses funds in accordance with the instructions, including charges for title insurance, settled fees, real estate commissions and all payments required under the contract.
- Prepares drafts and final reports to the parties, explaining the disposition of all funds deposited in escrow and its exact distribution at closing of the transaction (these are useful for the preparation of the tax return).