Escrow: To close the sale of a house, a neutral, third party (the escrow company) is engaged to assure the process will close properly and on time. A house 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. A simple way to think of what an escrow company does is to think of the use of PayPal for online purchases.
The escrow holder makes sure that the terms and conditions of the agreement between the sellers and the buyers are performed prior to the sale being finished.
These are the records that escrow holders usually look for:
- 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
- Loan documents
- Tax statements
Upon finishing of all instructions of the escrow, closing can take place. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. You'll then receive the title to the home and the title insurance gets dispersed as stated in the escrow instructions.
At the close of escrow, fees are paid in an acceptable form to the escrow. You'll know when it's time to submit the form of payment.