An escrow is an arrangement in which an impartial third party, called an Escrow Officer, holds legal documents and funds on behalf of a buyer, seller and lender and distributes those funds in accordance to the instructions stated and agreed upon by all parties to the transaction. Both parties rely on the Escrow Officer to carry out their instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out. An escrow closing is convenient for the 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 Officer as the central depositing point. If the instructions from all parties to an escrow are clearly drafted, fully detailed and mutually consistent, the Escrow Officer can take many actions on their behalf without further consultation. This saves time and facilitates the closing of the transaction.
IN SUMMARY: The escrow process was developed to help facilitate the sale or purchase of your home. The Escrow Officer accomplishes this by:
- Acting as the impartial “stakeholder,” or depository of documents and funds.
- Keeping all parties informed and on track for a timely closing.
- Responding to the Lender’s requirements and instructions.
- Obtaining approvals of reports and documents from the parties as required.
- Prorating and adjusting insurance, taxes, rents, etc.
- Recording of the Deed, Mortgage and other required documents.
- Maintaining security and accountability of monies deposited and to be disbursed.
- Securing and providing Title Insurance policies as instructed.