Escrow: To finalize the sale of a property, a neutral, third party (the escrow holder) is brought into the picture to assure the transaction will close properly and on time. A place is said to be in escrow when in the closing process, funds is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. An everyday way to understand what an escrow company does is to think of how you might use PayPal for Internet purchases.
The escrow holder is careful to assure that all terms and conditions of the seller's and buyer's contract are performed prior to the sale being finished. This includes receiving monies and paperwork, filling out required forms, and seeking out the release documents for any loans or liens that have been paid off with the transaction, assuring you have a clear title to your property before the purchase price is fully paid.
These are the legal documents that escrow agents usually compile:
- Loan documents
- 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
You're ready to close when all steps are finished in escrow process. All outstanding payments and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the house is then given to you as buyer and related title insurance is issued as outlined in the escrow policy.
The escrow agent gets a payment when the closing is complete. I'll keep you informed on the procedure.