An escrow is an arrangement made under a contract between a Buyer and Seller. When your offer has been accepted and conveyed, escrow is opened. As the neutral third party, escrow is responsible for receiving and disbursing money and/or documents. Both the buyer and seller expect the escrow agent to carry out their written instructions associated with the transaction and also to advise them if any of their instructions are not being met, or cannot be met. If the instructions from all parties to an escrow are clearly set out, the escrow officer can proceed on behalf of the buyer and seller without further consultation.
TYPICAL ROLES IN THE CLOSING PROCESS
The Seller/Agent
Delivers Purchase Sale Agreement to the escrow agent
Prepares the paperwork necessary to close the transaction
The Buyer/Agent
Deposits funds required to close in with the escrow agent
Approves the commitment for title insurance, or other items as called for by the Purchase Sale Agreement
Executes the paperwork and loan documents necessary to close the transaction
The Lender
Deposits loan documents to be provided by the buyer
Deposits the loan funds
Informs the escrow agent of the conditions under which the loan funds may be used
The Escrow Agent
Clears Title
Obtains title insurance
Obtains payoffs and release documents for underlying loans on the property
Receives funds from the buyer and/or lender.
Prepares vesting document affidavit on the seller's behalf.
Prorates insurance, taxes, rents, etc.
Prepares a final statement (often referred to as the "HUD Statement" or " Settlement Statement") for each party, indicating amounts paid in conjunction with the closing of your transaction.
Forwards deed to the country for recording.
Once the proper documents have been recorded, the escrow agent will distribute funds to the proper parties.
Escrow is the process that gathers and processes many of the components of a real estate transaction. The sale is officially closed when the new deed is recorded and funds are available to the seller, in turn transferring ownership from the seller to the buyer. The escrow agent is a neutral third party acting on behalf of the buyer and seller.
Written by Julieta Volcanes Natera.
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