What Exactly Is An Escrow?
An escrow occurs when a neutral third party holds
the documents and monies involved in a real estate
transaction and ensures that all conditions of the
transaction are met. Escrow also refers to a special
account that a lender establishes to hold monthly
installments from the borrower to cover property
taxes and insurance.
What Does An Escrow Holder Do?
An escrow holder is a neutral third party who takes
instructions based on the terms of the real estate
transaction and, when necessary, the lender's
requirements.
What Are The Duties Of The Escrow Holder?
Receiving and holding all monies,
instructions, and documents pertaining to the
real estate transaction.
Serving as the communication link and
liaison between all parties.
Requesting a preliminary title search to
determine the condition of title to the
property.
Requesting a beneficiary statement or payoff
demand from existing lenders.
Holding inspection reports, deeds, and
insurance documents.
Complying with the lender's requirements in
its instructions to escrow.
Preparing or obtaining the grant deed.
Prorating taxes, interest, insurance, rents,
and other costs related to the property.
Recording the deed and other documents.
Requesting the title insurance policy.
Closing the escrow according to the
instructions of the buyer, seller, and lender.
Disbursing funds as authorized by the
instructions, including charges for real estate
commissions, loan payoffs, title insurance,
taxes, recording fees, and other costs.
Preparing final statements of disposition of
all funds.
Key terms and phrases commonly associated with
escrow include:
Escrow Payment
Funds that a mortgage service provider withdraws from a
borrower's escrow account to pay property taxes and
insurance.
Escrow Analysis
A lender's periodic examination of an escrow account
to determine if the lender is withholding enough
funds from a borrower's monthly mortgage payment to
pay for expenses such as property taxes and
insurance.
Back-to-Back Escrow
Arrangements that an owner makes to oversee the sale
of one property and the purchase of another at the
same time, also known as a concurrent closing.
Escrow Closing
An escrow closing occurs when all conditions of a
real estate transaction are met and the
title of the property is transferred to the
buyer.
Escrow Company
A firm that acts as a neutral third party to ensure
that all conditions that the buyer, seller, and
lender establish in a real estate transaction are
met.
