FAQ
What is the definition of Escrow?
Escrow means any transaction in which a neutral third party holds funds and documents of ownership of either real or personal property for a buyer and seller. The buyer and seller provide instructions on the terms and requirements of the transaction to the neutral third party. When all the terms and requirements are met, the neutral third-party transfers title to the buyer and the seller receives their funds.
Why do I Need an Escrow?
Whether you are the buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until ALL instructions in the transaction have been followed. The Escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the Escrow holder, and to disburse funds and/or convey title only when all provisions of the Escrow have been complied with.
What does “in escrow” mean?
When you hear the phrase “in escrow”, it means that all items placed in the escrow account (e.g., earnest money, property deed, loan funds) are held with an escrow agent until all conditions of the escrow arrangement have been met. The conditions usually involve receiving an appraisal, title search, inspections and approved financing.
While the earnest money is in escrow, neither the buyer or seller can touch it. Once conditions are met, the earnest money will likely be applied toward the purchase price of the home.
What does it mean to close escrow?
To close escrow means that all of the escrow conditions have been met and the funds/title have legally passed from the seller to buyer. During the closing of escrow process, a escrow officer will disburse transaction funds to the appropriate parties, ensure all documents are signed and have the appropriate title transferring documents recorded.