Estimated reading time: 2 minutes
What exactly is escrow? Here’s a Definition.
The basics of escrow are fairly simple. By definition, escrow is a term that describes the neutral third-party handling of funds, documents, and tasks specific to a settlement. Initially, the real estate purchase agreement or sale contract outlines this party. Escrow funds are held until conditions have been met per the sales agreement.
Starting Off: The Key Players
To start, the buyer or seller involved in the transaction will select the escrow provider. Often, they defer to their real estate agent to make this decision. For example, this provider could be an escrow company, title officer, or title/escrow attorney.
Role of the Escrow Provider
Next, the escrow provider has a duty to arrange and/or track the requirements outlined within the contract. These include home inspections, the purchase of homeowners insurance, the completion of repairs, and requirements.
The Escrow Process
Hey, we’re making progress learning about the basics of escrow! At this point, the escrow company distributes funds to the appropriate parties after all the requirements are met. Moreover, all the documents related to the transaction are signed prior to this.
How Escrow Costs are Covered
The buyer or seller, market conditions, or contractual agreements determines who covers the costs of escrow services.
What Happens at Your Closing
Upon completion of all tasks in the sale agreement, funds are disbursed. Finally, the escrow account closes after the transaction is complete.
There! Now you know the basics of escrow. We know there are a lot of confusing works and terms thrown out when you are purchasing a new home. This article aims to help you understand a little bit more about this particular title term. Remember, your realtor, settlement agent, attorney, or lender are available to answer questions concerning escrow. Read on further with our links below to help answer other questions you may have concerning your closing, as well.