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.
- 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.