Overview
Escrow is a neutral third party that supports the buyer and seller in carrying out of the executed purchase agreement and usually lasts 30-45 days on average, though it can be shorter or longer depending on the terms negotiated in the contract between buyer and seller.
Escrow is opened after the buyer and seller have the executed purchase agreement, earnest money has been deposited, and the parties’ identities confirmed (date of birth, social, etc.). Escrow becomes the depository for all monies (deposit and lender), instructions and documents, and shows the disbursement of all funds through debits and credits.
The Escrow officer has the responsibility of seeing that all terms of the escrow are carried out in accordance with the purchase agreement. They can hold inspection reports and bills for work performed as required by your purchase agreement. Other elements of the escrow include hazard insurance, title insurance and the grant deed from the seller to you. Escrow cannot be completed until all requirements have been satisfied, and all parties have signed escrow documents.
Escrow duties
- Serve as the neutral agent between all parties
- Prepare the escrow instructions
- Request a preliminary title search
- Comply with lenders requirements
- Receive purchase funds (earnest money deposit and final deposit balance) from the buyer
- Prepare and secure the deed and documents
- Prorate taxes, insurance, etc.
- Secure the release of all contingencies
- Request the title insurance policy
- Record the deed and any other documents
- Close the escrow based on instructions from the buyer, seller, and lender
- Disburse funds as authorized by the instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs
- Prepare the final statements for all parties showing the disbursements of funds in the account.