What
is Escrow?
Once
the offer is agreed to by all parties concerned, the agent will
take the written final agreement and the deposit check and deposit
them "in escrow." Escrow will then be deemed open.
The purpose of an escrow is to enable a buyer and seller to deal
with each other without risk. Before title to the property can be
transferred to the new buyer, the buyer must deposit into escrow
all monies necessary to pay for the home. This is most commonly
done when the buyer obtains a loan.
Then, the seller must be paid, the seller's old mortgage paid off,
and any other liens on the property must be paid off. All responsibility
for handling funds and documents is delegated to the escrow holder,
a neutral third party, which is usually a title insurance company
or escrow company.
Your title insurance officer can answer many of the frequently asked
questions about title insurance, preliminary reports, and alternative
ways of holding title to property in California. In a simple transaction,
the buyer delivers the agreed upon funds to the escrow holder. The
buyer also instructs the escrow holder to deliver to the seller
the stated sum only after all conditions have been met, and title
is vested in the buyer. Concurrently, the seller deposits his deed
and other documents with the escrow holder, authorizing their delivery
when the buyer has deposited the agreed purchase price.
The contracting parties deposit funds or documents with the escrow
holder, for delivery to the respective parties upon performance
of all conditions of the agreement.
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