|
What Exactly Is An Escrow?
An escrow occurs when a neutral third party holds the documents
and monies involved in a real estate transaction and ensures
that all conditions of the transaction are met. Escrow also refers
to a special account that a lender establishes to hold monthly
installments from the borrower to cover property taxes and insurance.
What Does An Escrow Holder Do?
An escrow holder is a neutral third party who takes instructions
based on the terms of the real estate transaction and, when necessary,
the lender's requirements.
What Are The Duties Of The Escrow Holder?
- Receiving and holding all monies, instructions, and documents
pertaining to the real estate transaction.
- Serving as the communication link and liaison between all parties.
- Requesting a preliminary title search to determine the condition
of title to the property.
- Requesting a beneficiary statement or payoff demand from
existing lenders.
- Holding inspection reports, deeds, and insurance documents.
- Complying with the lender's requirements in its instructions
to escrow.
- Preparing or obtaining the grant deed.
- Prorating taxes, interest, insurance, rents, and
other costs related to the property.
- Recording the deed and other documents.
- Requesting the title insurance policy.
- Closing the escrow according to the instructions
of the buyer, seller, and lender.
- Disbursing funds as authorized by the instructions,
including charges for real estate commissions,
loan payoffs, title insurance, taxes,
recording fees, and other costs.
- Preparing final statements of disposition
of all funds.
Key terms and phrases commonly associated with escrow include:
Escrow payment:
Funds that a mortgage servicer withdraws from a borrower's escrow
account to pay property taxes and insurance.
Escrow analysis:
A lender's periodic examination of an escrow account to determine
if the lender is withholding enough funds from a borrower's monthly
mortgage payment to pay for expenses such as property taxes and
insurance.
Back-to-back escrow:
Arrangements that an owner makes to oversee the sale of one property
and the purchase of another at the same time, also known as a
concurrent closing.
Escrow closing:
An escrow closing occurs when all conditions of a real estate transaction
are met and the title of the property is transferred to the buyer.
Escrow Company:
A firm that acts as a neutral third party to ensure that all conditions
that the buyer, seller, and lender establish in a real estate
transaction are met.
|
