Escrow: To close the sale of a home, a neutral, third party (the escrow company) is brought into the picture to assure the process will close correctly and on time. A property is said to be in escrow when in the closing transaction, payment is held by a third party on behalf of two parties when the exchange of money takes place. For example, in an online purchase, PayPal is the secure third party that obtains the buyer's cash, and then disburses the money to the seller.
The escrow holder insures that all terms and conditions of the seller's and buyer's negotiated agreement are completed prior to the sale being completed. This includes receiving funds and paperwork, filling out required forms, and seeking out the release documents for any loans or liens that have been cleared with the transaction, assuring you have a clean title to your home before the negotiated price is fully paid.
These are the legal documents that escrow holders usually look for:
- 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 home happens when the steps of the escrow are complete. All debts and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the property is then given to you as new owner and related title insurance is issued as noted in the escrow instructions.
When closing is done, you'll submit a payment to the escrow company. I'll keep you up-to-date on the procedure.