An escrow is:
- A contractual arrangement in which a third party receives and disburses money or documents for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacting parties, or
- An account established by a broker for holding funds on behalf of the broker’s principal or some other person until the consummation or termination of a transaction or,
- A trust account held in the borrower’s name to pay obligations such as property taxes and insurance premiums.
The word derives from the Old French word escroue, meaning a scrap of paper or a scroll of parchment; this indicated the deed that a third party held until a transaction was completed.
From Wikipedia, the free encyclopedia
An Escrow in Plain English
An escrow is used to protect all parties involved in a transaction. In most cases a title company (i.e. First American Title) will act as a neutral third party. All funds will be deposited with the escrow company to be held for safe keeping. Both the buyers and sellers real estate agents will provide to escrow, copies of the purchase contract and all other relevant documents. The mortgage broker and lender will also provide loan docs and loan requirements to escrow. The escrow agent is basically the middle man. They will process all the information provided. Then, when all requirements and conditions of the contract/loan are met. The escrow agent will start the closing process. Closing is the simultaneous act of all parties doing there part to finish the transaction. All documents will be signed, filed, and recorded as required. All funds will be dispersed. And, Ownership will transfer.
The graphic below will give you a more detailed view of all the steps required to carry out the escrow process.
The Life of an Escrow
If you have any other questions, feel free to contact us.