Escrow: To close the sale of a house, a neutral, third party (the escrow company) is engaged to assure the transaction will close perfectly and on time. A place is said to be in escrow when in the closing process, payment is held by a third party on behalf of two parties when the exchange of money takes place. For example, in an online auction, PayPal is the neutral third party that obtains the buyer's payment, and then sends the payment to the seller.
The escrow holder is careful to assure that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being completed. This includes getting funds and documents, filling out required forms, and seeking out the release documents for any loans or liens that were cleared with the transaction, assuring you have a clear title to your home before the purchase price is fully paid.
These are the legal documents that escrow agents usually look to collect:
- Tax statements
- 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
You're ready to close when all steps are finished in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. Title to the house is then given to you as new owner and correct title insurance is issued as noted in the escrow policy.
The escrow company gets a payment at the completion of closing. As your real estate professional, I'll inform you of the acceptable form of payment.