Escrow Basics

During the process called escrow, a neutral, third party collects and holds all of the information, documentation, and funds needed by both parties to get to the closing. They will receive the Earnest Money Deposit (EMD), complete and file forms that are required during the process, and obtain documentation of the release of any loans or liens that are paid off on the property during the transaction.

The Escrow Agent/Holder will generally collect the following documents:

  • Loan documents
  • Tax statements
  • Fire and other insurance policies
  • Title insurance policies
  • Sale contract or purchase agreement and addenda
  • Documentation for seller-financed properties
  • Requests for services to be paid out of escrow funds, including needed repairs

Closing takes place once all of the escrow instructions have been fulfilled. Fees and payments are collected, the property title is transferred and properly filed, and title insurance is issued on the property, according to the escrow instructions.

An Escrow Agent/Holder does the following:

  • Prepares all escrow instructions
  • Requests a title search to determine if there are any discrepancies or clouds on the title
  • Complies with the lender’s instructions
  • Receives funds from the buyer
  • Prorates payments of insurance, property tax, mortgage interest, and any other payments due according to the instructions
  • Records deeds and any other documentation as needed
  • Requests the title insurance policy
  • Closes escrow when all seller and buyer instructions have been completed
  • Disburses funds and completes final instructions

An Escrow Agent/Holder does NOT do the following:

  • Offer advice to either party. An escrow agent is a neutral third party.
  • Offer opinions on legal or financial matters, including tax implications.

Have questions about the escrow process or any other aspect of a home purchase or sale? We have the advice and expertise you need to better understand every element of the process. Our goal is to provide clarity and satisfaction from your initial search all the way to the closing table and beyond. Contact us for more information.

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