Buying or selling a home (or other piece of real property) usually involves the transfer of large sums of money. It is imperative that the transfer of these funds and related documents from one party to another be handled in a neutral, secure and knowledgeable manner. For the protection of buyer, seller and lender, the escrow process was developed.
As a buyer or seller, you want to be certain all conditions of sale have been met before property and money change hands. The technical definition of an escrow is a transaction where one party engaged in the sale, transfer or lease of real or personal property with another person delivers a written instrument, money or other items of value to a neutral third person, called an escrow agent or escrow holder. This third person holds the money or items for disbursement upon the happening of a specified event or the performance of a specified condition.
Simply stated, the escrow holder impartially carries out the written instructions given by the principals. This includes receiving funds and documents necessary to comply with those instructions, completing or obtaining required forms and handling final delivery of all items to the proper parties upon the successful completion of the escrow.
The escrow must be provided with the necessary information to close the transaction. This may include loan documents, tax statements, fire and other insurance policies, title insurance policies, terms of sale and any seller-assisted financing, and requests for payment for various services to be paid out of escrow funds.
If the transaction is dependent on arranging new financing, it is the buyer’s or the buyer’s agent’s responsibility to make the necessary arrangements. Documentation of the new loan agreement must be in the hands of the escrow holder before the transfer of property can take place. A real estate agent can help identify appropriate lending institutions.
When all the instructions in the escrow have been carried out, the closing can take place. At this time, all outstanding funds are collected and fees- such as title insurance premiums, real estate commissions, termite inspection charges- are paid. Title to the property is then transferred under the terms of the escrow instructions and appropriate title insurance is issued.
Payment of funds at the close of escrow should be in the form acceptable to the escrow, since out-of-town and personal checks can cause days of delay in processing the transaction.
The following items represent a typical list of what an escrow holder does and does not do:
THE ESCROW HOLDER:
THE ESCROW HOLDER DOES NOT:
Your local title company should be happy to provide additional information.
Article by CLTABack to Table of Contents
SEEK Real Estate® | 5251 W. 116th Place Suite 200, Leawood KS 66211 | 888.644.7335 | Equal Housing Opportunity
SEEK REAL ESTATE® is a registered trademark of Seek Real Estate, LLC. SEEK Real Estate® is a licensed real estate Brokerage in the states of Kansas & Missouri. © 2017 SEEK Real Estate, LLC. All Rights Reserved.
The information displayed on this page is confidential, proprietary, and copyrighted information of Heartland Multiple Listing Service, Inc. (Heartland MLS).© 2017, Heartland Multiple Listing Service, Inc. Heartland MLS and Seek Real Estate do not make any warranty or representation concerning the timeliness or accuracy of the information displayed herein. In consideration for the receipt of the information on this page, the recipient agrees to use the information solely for the private non-commercial purpose of identifying a property in which the recipient has a good faith interest in acquiring. The data relating to real estate displayed on this website comes in part from the Heartland Multiple Listing Service database compilation. The properties displayed on this website may not be all of the properties in the Heartland MLS database compilation, or all of the properties listed with other brokers participating in the Heartland MLS IDX program. Detailed information about the properties displayed on this website includes the name of the listing company. Information last updated on 2017-10-20. Terms of Usage Agreement