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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. An escrow provides:
(a) An impartial custodian who holds the funds and documents and makes
concurrent delivery of the transfer documents to the buyer and the purchase
money to the seller at the moment when the terms and conditions of the
transaction have been performed;
(b) A “clearinghouse” for the payment of all liens and other encumbrances;
(c) A trained agent who performs all details in prorating and adjusting
accounts between the parties, and assumes responsibility for the many
ministerial tasks involved in closing.
The function of the escrow agent is very closely related to title
examination. The buyer will usually demand a preliminary title report prior
to depositing his funds. The buyer’s instructions will enumerate the
exceptions or encumbrances allowed to remain on the property at closing. To
assure compliance with the buyers’ instructions the title company must
re-examine the records of title at the time of closing and, as escrow agent
deliver the necessary title insurance policies and documents, and disburse
the funds.
When an escrow is placed with the title company, the control of title
documents and records is centralized under “one roof.” The escrow agent has
the complete facilities of the title plant at his fingertips.
What Services Does An Escrow Agent Perform?
·
prepares the necessary instructions from the buyer and seller and receives
the necessary
documents and funds.
·
pro-rates interest on liens to be assumed.
·
pro-rates rent.
·
pro-rates taxes
·
pro-rates and obtains endorsements of existing fire insurance policies when
requested
by a lender or a party to escrow.
·
clears checks deposited by purchaser through banking channels
·
obtains title insurance for protection of buyer and lender.
·
closes transaction when instructions of 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.
The escrow fee is usually split between the buyer and seller, but this can
be changed by agreement of the parties.
Real estate brokers, attorneys, and lending institutions, among others,
confidently use the escrow as a sure method for coordinating many of the
details in a real property transaction. The reliability of your title
company, as escrow agent, creates a team with these specialists to effect a
smoother, more efficient and timely closing.
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 price 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 liens.
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.
Escrow information is always kept in the strictest confidence. The
information in the file pertaining to the transaction will be available for
a minimum of six years after closing.
How Can I Assist the Escrow Agent in Closing?
To assist your escrow agent with your closing, you should provide your
escrow agent with:
·
the correct legal description from the deed, prior title policy or current
survey
·
full names, addresses and telephone numbers of the parties
·
statement as to how buyer wants to take title
·
names and loan numbers of all holders of mortgages, deeds of trust and
contracts of
sale
·
terms of new encumbrances
·
current tax bills and receipts
·
complete list of tenants, rents, and deposits
·
names of legal counsel who may represent parties in transaction.
Usually, most of this information will be stated in the earnest money
agreement, a signed copy of which should be furnished to the escrow agent. |