To finalize the sale of a property, a neutral third party (the escrow agent), is engaged to assure the transaction will close correctly and on time. A property is said to be in escrow when in the closing process. Funds are held by a third party on behalf of a buyer and a seller when the transaction is taking place. A simple way to understand what an escrow company does is to compare it to PayPal for online purchases and how their process works.
The escrow holder makes sure that the terms and conditions of the agreement between the seller and buyer are met prior to the sale being finished.
Escrow holders want to obtain the following legal documents:
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
Closing on the property takes place when the steps of the escrow are finished. All expenses, such as title insurance, inspections, and real estate commissions are paid. You’ll then secure the title to the house and the title insurance gets issued as stated in the escrow instructions.
When closing is completely finished, you’ll submit a payment to the escrow holder. I’ll keep you up-to-date through the procedure.