What's Escrow?
Escrow Defined
It's a very interesting word, don't you think? Escrow. According to thefreedictionary.com escrow is something of value, such as a deed, stock, money, or written instrument, that is put into the custody of a third person by its owner, a grantor, an obligor, or a promisor, to be retained until the occurrence of a contingency or performance of a condition. That's formal language, which interpreted, means a contract where an impartial party, such as a lawyer or escrow company, is given the position of ensuring that the transfer of ownership of property from the Seller to the Buyer happens exactly as stated in the terms of sale, which are agreed to by all involved parties.
The Beginning Of The Closing Process
Escrow is also referred to as closing or settlement. The documents for the sale are held by an escrow officer until everything regarding the sale is settled and then they are given to the appropriate parties at the appropriate time. When the closing actually takes place and all parties to the sale are assembled to sign the paperwork, the seller of the property will be asked to give the buyer a clear title to the property and in response, the buyer will give the seller the monies required to close the sale. This is the point in time where the mortgage or loan is closed.
Opening Escrow
Conversely, opening an escrow is a simple process which can be started by anyone involved in the transaction. Usually, the real estate agent does the job. However, when the deal is a for-sale-by-owner type of transaction in which no agent is employed, then either the buyer or seller can open escrow. A visit is made to the office of a firm or lawyer who handles closings and the deposit money and sale instructions are given over to be kept until the deal is officially closed. This all takes place when the initial offer to purchase is made and a good faith check is in hand. Without the good faith deposit, there is no escrow opened.
The Closing Agent
Once the buyer's deposit money is "in the bank", the escrow is considered to be open and a file number is issued. A closing agent, also called an escrow officer, is given the job of following the escrow through to completion and this person is the main contact at the title or closing firm. If there are any questions about the title report, money held in escrow, the obligations of the escrow or the process in general, they should be directed to this specific person.
Even though escrow is handled by a wide number of individuals, the escrow officer assigned to an individual closing is the primary contact during the entire process of the sale and closing.
