Escrow: An escrow holder is brought on to assure your house closes on time and the closing process goes smoothly. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in a Web transaction, PayPal is the secure third party that obtains the buyer's cash, and then sends the funds to the seller.
The escrow agent makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are completed prior to the sale being completed. This includes getting funds and records, filling out required forms, and obtaining the release documents for any loans or liens that have been paid with the transaction, assuring you have a free title to your place before the agreed upon price is fully paid.
These are the records that escrow companies usually compile:
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
- Terms of sale and any seller-assisted financing
You're ready to close when all parts are finished in escrow process. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. Title to the property is then transferred to you as new owner and correct title insurance is issued as noted in the escrow policy.
The escrow holder gets a payment at the completion of closing. As your real estate agent, I'll inform you of the acceptable way of paying.