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 What is Escrow?
Escrow is a way of transferring or exchanging property and/or money
using a neutral third party. Escrow is most commonly associated with
real estate transactions. Escrow enables the buyer and the seller to
transact business with each other through a neutral party, thereby
minimizing their risk. In the escrow, all parties involved give their
instructions to this neutral intermediary, the "escrow holder", whose
duty it is to assure that no funds or property will change hands until
all instructions have been carried to completion. When all conditions
of the purchase agreement are met, the escrow agent assigns the
property title to the purchaser and distributes the funds to the
seller.
Why Do I Need An Escrow?
Whether you are the buyer, seller, lender or borrower, you want the
assurance that no funds or property will change hands until ALL of the
instructions in the transaction have been followed. The escrow holder
has the obligation to safeguard the funds and/or documents while they
are in the possession of the escrow holder, and to disburse funds
and/or convey title only when all provisions of the escrow have been
complied with.
Can I get
legal advice from an escrow officer?
An escrow officer is not a legal counselor and cannot give legal
advice. The purpose of escrow is to take, and comply with, instructions
to carry out the mutual agreement of the buyer and seller. In the event
that the either disagree, the escrow officer must remain neutral until
an agreement is reached. The escrow officer should never become
involved in the negotiation.
If I have questions about my escrow, where can I get answers?
If negotiations have been conducted through a real estate agent or
broker, that person should be your primary consultant. The role of an
independent agent prohibits the escrow officer from answering many of
your questions. However, a knowledgeable escrow officer, whose
responsibility is giving impartial service to all parties, will refer
you to the proper source for your answers. An escrow officer will often
suggest that the customer seek the advice of legal counsel or a tax
consultant.
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