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| What is Escrow? |
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Once the contract has been negotiated and signed by all parties, the next step is to open escrow. An escrow is an arrangement in which a disinterested third party, called an escrow holder, holds legal documents and funds on behalf of the Buyer and Seller, and distributes them according to the Buyer’s and Seller’s instructions.
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People buying and selling real estate often open escrow for their protection and convenience. The Buyer can instruct the escrow holder to disburse the purchase price funds to the Seller only upon the satisfaction of certain prerequisites and conditions. The Seller can instruct the escrow holder to retain possession of the deed until that which the Seller has required, including receipt of the purchase price, are met. Both rely on the escrow holder to carry out faithfully their mutually consistent instructions relating to the Contract
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and to advise them if any of their instructions are not mutually consistent or cannot be carried out. |
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An escrow is convenient for both Buyer and Seller because both can move forward separately but simultaneously in providing inspections, reports, loan commitments and funds, deeds and many other items, using the escrow holder as the central depositing point. If the instructions from all parties to an escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions on their behalf without further consultation. This saves time and facilitates the closing of the transaction.
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How do I open Escrow?
We will take care of this for you. As soon as you execute the Purchase Agreement, we will place your initial deposit into an escrow account at the Title Company.
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How do I know where my money goes?
Written evidence of the deposit is generally included in your copy of the sales contract. The funds will then be deposited in a separate escrow or trust account and processed through your local bank. You will receive a receipt for the funds from the Title Company.
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What information do I need to provide?
You may be asked to complete a Statement of Identity as part of the paperwork. Because many people have the same name, the Statement of Identity is used to identify the specific person in the transaction through such information as date of birth, social security number, etc. This is to make certain there are no liens or judgments against one of the parties to the transaction. This information is considered confidential.
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