Escrow: To close the sale of a property, a neutral, third party (the escrow company) is engaged to assure the transaction will close properly and on time. A place is said to be in escrow when in the closing transaction, payment is held by a third party on behalf of a buyer and a seller when the transaction is taking place. For example, in a Web auction, PayPal is the reliable third party that obtains the buyer's funds, and then hands over the funds to the seller.
Tying up any loose ends like obtaining funds, signing forms, getting the documents for loans and liens, and making sure you get a spotless title to the home in preparation of your purchase gets finalized are all part of the job of the escrow company.
Escrow companies want to obtain the following legal documents:
- Fire and other insurance policies
- Title insurance policies
- 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
Upon completion of all portions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. The property's title gets transferred to you and title insurance is issued per the steps of your particular escrow agreement.
When closing is done, you'll submit a payment to the escrow holder. As your real estate agent, I'll inform you of the acceptable way of paying.