FAQ
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 of the instructions in the transaction have been followed. The Escrow holder has the obligation to safeguard the funds and / or documents while they are in its possession, and to disburse funds and / or convey title only when all provisions of the escrow have been complied with.
How Does Escrow Work?
The Principals to the escrow: Buyer, Seller, Lender, Borrower, cause escrow instructions, most usually in writing, to be created, signed and delivered to the Escrow Officer. If a Broker is involved, he will normally provide the Escrow Officer with the information necessary for the preparation of your escrow instructions and documents.
The Escrow Officer will process the escrow, in accordance with the escrow instructions, and when all conditions required in the escrow can be met or achieved, the escrow will be "closed."
The duties of an Escrow holder include: following the instructions given by the Principals and parties to the transaction in a timely manner; handling the funds and / or documents in accordance with the instruction; paying all bills as authorized; responding to authorized requests from the principals; closing the escrow only when all terms funds in accordance with instructions, and provide an accounting for same - the Closing or Settlement Statement.
Who Chooses the Escrow?
The selection of the Escrow holder is normally done by agreement between the Principals. If a Real Estate Broker is involved in the transaction, the Broker may recommend an Escrow holder. However, it is the right of the Principals to use an Escrow holder who is competent and who is experienced in handling the type of escrow at hand. There are laws that prohibit the payment of referral fees. This allows for the best possible escrow services without any compromise generated by a person receiving a referral fee.
When do I open an Escrow?
As soon as you and your other party are in complete agreement, a mutually selected escrow officer should be called. Consider the professional advice of your real estate agent.
What does the Escrow Officer need from me?
Along with the terms of the sale the following are a short list of items that maybe helpful to expedite your transaction.
Seller:
- Recent existing lender statement(s), if applicable.
- Current Home Owner Association documents.
- Recent structural pest control report (if required).
Buyer:
- Complete names & vesting (seek tax advice as to consequences of how you take title).
- Initial deposit check.
- Terms of financing and new lenders name.
- Insurance agent information.