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What is Escrow and Why is it Needed?
To put it in lehman's terms Escrow is a third person that holds money or other valued item in account for one person to
transfer to another person. For example if you are buying a home escrow is opened and all money used in the purchase
of a home is deposited into an escrow account to be distributed according to the instructions and terms agreed to by all
parties involved in the transaction. An escrow company is there to make sure all this money is distributed correctly and to
the terms in the escrow instructions.
You may be asking why escrow is needed, well whether you're the buyer, seller, lender or borrower, you will want
assurance that none of the funds or property will be distributed until all of the escrow instructions involved in the
transaction have been followed. The escrow holder has the obligation to make sure the funds and/or documents are
safeguarded while they have possession, also to disburse funds and/or transfer title only when all provisions of the
escrow have been complied.
There are primary principals in an escrow; the buyer, seller, borrower or lender will be the cause of escrow instructions
needed to be in writing. Therefore escrow instructions must be created, signed and delivered to whom ever is acting as
the escrow officer. If you are working with a broker then he will usually give the escrow officer with all the necessary
information needed for the preparation of all the escrow documents.
The escrow officer processes the escrow, in harmony with the escrow instructions. When all conditions required in
escrow can be met, the escrow will be considered as "closed." Every escrow will be different in some of it's aspects,and
could change as it deals with your property and the transaction it is intended to close.
The duties and responsibilities of an escrow holder includes following instructions given by the principals to the
transaction in a timely manner set forth in advance. Handling the funds and/or documents in compliance with the
instructions, paying all bills, judgments or collections as required by the principals of the transaction, closing the escrow
only when all terms are met in compliance with instructions and provide an accounting for all parties involved which is
called the Closing or Settlement Statement.
The choice of who to use for escrow is normally done by agreement between the principals. If a real estate broker is
involved they may recommend an escrow holder or company to handle the transaction based on prior experience. It is in
the best interest for all parties involved to use an escrow holder that is experienced in handling the type of escrow
needed at hand. There are laws that make it illegal for the escrow holder to pay referral fees to brokers this allows the
consumer to know that they can get the best possible escrow services without any compromise caused by someone
receiving a referral fee.
To put it in lehman's terms Escrow is a third person that holds money or other valued item in account for one person to
transfer to another person. For example if you are buying a home escrow is opened and all money used in the purchase
of a home is deposited into an escrow account to be distributed according to the instructions and terms agreed to by all
parties involved in the transaction. An escrow company is there to make sure all this money is distributed correctly and to
the terms in the escrow instructions.
You may be asking why escrow is needed, well whether you're the buyer, seller, lender or borrower, you will want
assurance that none of the funds or property will be distributed until all of the escrow instructions involved in the
transaction have been followed. The escrow holder has the obligation to make sure the funds and/or documents are
safeguarded while they have possession, also to disburse funds and/or transfer title only when all provisions of the
escrow have been complied.
There are primary principals in an escrow; the buyer, seller, borrower or lender will be the cause of escrow instructions
needed to be in writing. Therefore escrow instructions must be created, signed and delivered to whom ever is acting as
the escrow officer. If you are working with a broker then he will usually give the escrow officer with all the necessary
information needed for the preparation of all the escrow documents.
The escrow officer processes the escrow, in harmony with the escrow instructions. When all conditions required in
escrow can be met, the escrow will be considered as "closed." Every escrow will be different in some of it's aspects,and
could change as it deals with your property and the transaction it is intended to close.
The duties and responsibilities of an escrow holder includes following instructions given by the principals to the
transaction in a timely manner set forth in advance. Handling the funds and/or documents in compliance with the
instructions, paying all bills, judgments or collections as required by the principals of the transaction, closing the escrow
only when all terms are met in compliance with instructions and provide an accounting for all parties involved which is
called the Closing or Settlement Statement.
The choice of who to use for escrow is normally done by agreement between the principals. If a real estate broker is
involved they may recommend an escrow holder or company to handle the transaction based on prior experience. It is in
the best interest for all parties involved to use an escrow holder that is experienced in handling the type of escrow
needed at hand. There are laws that make it illegal for the escrow holder to pay referral fees to brokers this allows the
consumer to know that they can get the best possible escrow services without any compromise caused by someone
receiving a referral fee.
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