the money and be responsible for handling the paperwork, etc., but we do not recommend this. Also, most lenders will not be happy
with this.
Escrow, also called Settlement in some areas, is simply the mechanism by which a disinterested third
party, such as an attorney, escrow company or title company (banks and savings & loans often have
their own escrow departments) makes sure that ownership of the property is as it's supposed to be
and that the monies due are properly transferred. At the closing, all of the parties meet or have
already signed the appropriate documents. You as the seller, provide clear title and the buyer
provides the funds. If there is a loan, this is the place and the time it gets funded. It is worth
noting that many lenders require that the parties close the deal through an escrow in order to
ensure that every condition has been satisfied and that the paperwork has been properly executed
and recorded.
The fee for escrow is usually split between the buyer and seller.
ESCROWS protect both the seller and the buyer by:
Drawing up necessary documents and recording them;
Safeguarding all of the documents;
Receiving and distributing the funds;
Safeguarding the funds;
Making sure that each party has complied with the terms of the contract;
Making sure that all of the conditions within the contract have been satisfied;
Providing an accounting; and
Making sure that all of the applicable laws have been complied with.
Bringing Down Title
Bringing down title is your responsibility as the seller.
It is the process of arranging with a title company to examine the title to your property in order
to make sure you are the legal owner of the property; make sure you are entitled to transfer
ownership; make sure there are no liens or other outstanding claims against the property;
and secure title insurance.
Here Is How You Start The Escrow:
Contact the Escrow Holder. Anyone involved in the transaction may open the escrow.
It can be either party (or both), either attorney, or a real estate agent, if one is involved.
Then the following information and instructions are given to the escrow holder and the earnest
money is deposited.
Escrow information includes the seller and buyer's names, addresses and telephone numbers;
address of the property and legal description; the dates in the contract,
including the proposed closing date; terms of the contract, including the sale price,
seller's outstanding mortgage, amount of the buyer's proposed loan; how title is held by the
seller(s); and how it will be conveyed to the buyer. (i.e., joint tenancy, etc.)
REMEMBER, the escrow is a contract between you, your buyer and the escrow holder.
Be sure that you read and understand all of the terms of the instructions before you agree
to them and sign. If in doubt, ask questions of an attorney, because the escrow officer cannot
give you legal advice or interpret the documents for you. All that they are allowed to do is
explain each item and review how the numbers were calculated.
At The Closing
When all of the conditions of the contract have been met, it is time for the close of escrow.
This is the time when the money is paid out after all of the additions and subtractions are made.
The buyer deposits, either personally or through his lender, any remaining money due into the escrow
and signs the appropriate papers. You, the seller, sign the appropriate papers and receive a check
(your mortgage lender will receive what it is due). The escrow holder will record the deed and
any mortgage documents, such as the release deed.
Possession is transferred and the keys are turned over when the buyer's mortgage company funds
the money and there is verification that your bank, (or you), has received the money.
see: Residential Real Estate Lawyer to help you decide if you need a lawyer.
see: Real Estate Contract ABC's - The Basics to learn more about real estate contracts.
Our eBook Between Contract & Closing has a complete guide to what to do after the contract is signed.
