About Escrow
WHAT IS ESCROW?
Learning about Escrow begins when a real estate contract is signed by both parties and written escrow instructions are sent to the escrow officer. This is the process by which parties finance or transfer real estate documents, funds, and other items of value through a neutral third-party (the escrow company). The escrow officer is granted the authority to receive, safeguard, disburse funds and documents, and oversee the transaction based on specific instructions from both parties. Only once all conditions of the contract and written instructions are met will documents and funds change hands.
The Escrow Process
The escrow process is important as it protects the interests of all parties involved in the transaction to reduce risk. As a neutral third party maintains accountability and security of all funds and documents during the transaction, buyers, sellers, agents, lenders, and other parties may interact with peace of mind knowing no documents can be recorded nor can money change hands until the contract conditions are met.
More details below about Escrow and when it is needed.
When is Escrow Needed?
If you are planning to buy, sell, borrow, or lend, you will probably need to open escrow. Of course, if you are buying a loaf of bread or anything else where you can walk up to the seller with payment in hand and walk away with your purchase, escrow is not needed. But when the item in question cannot be handed over, escrow makes sure that all the required paperwork, deeds of trust, and all other details are taken care of.
Whether your transaction is for a starter home or multi-unit commercial rental property, and whether it is a short sale, REO, probate sale, refinance, or any regular sale, escrow is needed to process the transaction and coordinate all the details. This is basically all about escrow.
For most people, buying or selling a home is the largest financial transaction they will ever enter into. Because real estate transactions involve a great deal of money and documentation — and sometimes complex legal situations — escrow can become complicated and it does not always follow a straightforward path. This is why it is essential to work with escrow professionals like New Era Escrow, who have an in-depth understanding of the industry to avoid delays or legal complications.
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NEW ERA ESCROW TODAY!
How Does Escrow Work?
Both the buyer and seller must agree upon an escrow company. Once they have agreed on that, a contract or purchase agreement is signed by both parties and delivered to the escrow holder, along with escrow instructions that give the escrow company any other information and details that need to be met before finalizing the transaction. It then becomes the job of the escrow officer handling the case, and his or her company, to ensure that all the requirements of the agreement and the instructions are met.
Verifications to and from banks regarding all necessary loans and payment options, proof of completion of work for any items that need to be addressed, and any other requirements are verified and documented by escrow.
Escrow also holds all the funds and even hires title companies to ensure the property’s deed is clear and up to date. Once all the i’s are dotted and the t’s are crossed, escrow releases all items to the correct parties, and ensures the transaction closes and completes correctly. Keep in mind that escrow closes on the day the grant deed is recorded with the county recorder, not when the buyer signs loan documents with the lender or the lender funds the loan.
Duties of an Escrow Agent
The job of an escrow company and its officers is very complex and detail oriented, but as a general guideline, below is a list of some of their duties and responsibilities. Please be aware that this list is by no means complete – we do much more!
- Follow transaction instructions, agreed to by both parties, in a timely manner.
- Handle all monetary funds and related documents in accordance to the instructions given.
- Provide detailed accountings of all funds and assets handled by escrow.
- Respond to legitimate inquiries from the principals in a timely manner.
- Provide verified closing or settlement statements.
- Maintain strict confidentiality and maintain all private information in a secure manner.
- Allow escrow to close only if and when all terms of the transaction are met.
Contact An Experienced Escrow Company
At New Era Escrow, our escrow agents have years of experience handling all types of escrow transactions from straightforward residential transactions to complex note sale transactions and commercial sales.
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NEW ERA ESCROW TODAY!