The dictionary defines Escrow
as "The deposit of deed, bond, monies, contract or other written agreements
with a third person to be delivered or used only upon performance or
fulfillment of set conditions." More simply, Escrow may be defined as a
stakeholder.
In practice, Escrow includes all of the services of a person skilled in
the performance of the many details required to quickly and safely close
your real estate transaction. The Seller's title is protected, held in
safekeeping until all terms are complete. The Buyers may deposit funds,
secure in the knowledge that they will be held in trust until the transfer
of the property.
A real estate transaction requires time…time to perform the details of a
title search, to prepare documents and obtain financing. During this period,
the parties should be protected with a written contract containing all the
terms and conditions of the sale.
Escrow provides one central place where all funds and documents may be
deposited. Here they can be collected and disbursed only when all conditions
of the contract are met.
Escrow is an independent third party who can perform these services
impartially, protecting both Buyer and Seller, and acting on their written
instructions in dealing with lenders, attorneys, brokers, agents, and any
other parties involved in the transfer of the property.
The Escrow Officer is responsible for the final settlement between the
Buyer and Seller, the recording of the required documents, the payoff of the
existing liens or mortgages, and the proration of real property taxes, lease
rents, maintenance fees, and any other property expenses to assure an
accurate and complete closing.
Finally, escrow provides a lasting record of the transaction that will be
available in the future (up to seven years after the date of recording) to
establish the terms and conditions of the transaction.