What is Escrow?
An escrow is an arrangement in which a disinterested third party, called an escrow holder, holds legal documents and funds on behalf of a buyer and seller, and distributes them according to the buyer's and seller's instructions.
People buying and selling real estate often open an escrow for their protection and convenience. The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the escrow holder to retain possession of the deed to the buyer until the seller's requirements, including receipt of the purchase price, are met. Both rely on the escrow holder to carry out faithfully their mutually consistent instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.
The escrow process was developed to help facilitate the sale or purchase of your home. The escrow holder accomplishes this by:
Once an agreement between you and the seller has been finalized, escrow is ready to be opened. Escrow essentially allows for a disinterested third party (escrow holder) to keep all valuables and documents in trust until certain conditions are fulfilled.
Why You Need An Escrow: As the buyer, you want the assurance that no funds will change hands until all of the instructions in the transaction have been followed. This may include completion of all inspections and any repairs that were agreed upon.
How Escrow Works: The escrow holder is obligated to safeguard the funds and/or documents while they are in their possession, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.
These provisions are written in the escrow instructions, which are drafted from the provisions agreed upon in the purchase agreements by the parties involved in the transaction.
The escrow officer will endeavor to expedite the timely closing by keeping all parties informed, handling documents and paying all bills as authorized, responding to authorized requests from the principals, closing escrow after the terms and conditions are met, distributing funds in accordance with the instructions and providing a written closing statement of all the charges and credits to your account.
Your Responsibilities During Escrow: Your most important role during this time is to read and understand your escrow instructions. Be sure to ask your escrow officer to explain anything you don't understand, and make sure any legal questions are directed to your attorney.
In order to expedite the closing of escrow you should respond quickly to any correspondence and ensure any funds requested are delivered in the required form - cashiers checks or wired funds are preferable since escrow can only close on cleared funds and most other methods of funds transfer take more time to clear.
When escrow closes you will receive all your paperwork within a few days. As the new owner, you will receive your recorded deed directly from the County Recorder's office.
Processing the Escrow
And handle any and all problems that arise along the way!
WHAT EACH PARTY DOES IN ESCROW
The Escrow Holder:
Closing the Escrow
Once all the terms and conditions of the instructions of both parties have been fulfilled, and all closing conditions satisfied, the escrow is closed and the safe and accurate transfer of property and money has been accomplished.
Division of Charges
The method of dividing the charges for the services performed through escrow or as a result of escrow varies from place to place. The fees and service charges to be divided might include, for example:
Unless there is some special agreement between the buyer and seller as to how these charges are to be paid, local custom will generally be followed in drafting the instructions to the escrow holder as to how they are to be divided.
Alain Pinel Realtors
12772 Saratoga Sunnyvale Rd, Saratoga, CA 95032