Escrow: A neutral, third party (known as the escrow holder or the escrow agent) is hired to assure your house closes on time and the money exchanging part of closing goes smoothly. Escrow holders hold money for "safe-keeping" in an exchange between a buyer and seller. PayPal is a good way to picture an escrow company.
The escrow agent insures that all terms and conditions of the seller's and buyer's agreement are met prior to the sale being finished. This includes receiving funds and paperwork, signing required forms, and getting the release documents for any loans or liens that were cleared with the transaction, assuring you have a clear title to your house before the purchase price is fully paid.
These are the legal forms that escrow agents usually look for:
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
Closing on the property takes place when all of the procedures of the escrow are complete. At this time, all payments and dues for inspections, title insurance and real estate commissions are collected. You'll then get the title to the house and the title insurance gets issued as stated in the escrow instructions.
The escrow holder gets a payment at the completion of closing. I'll keep you up-to-date on the next steps.