Life of an Escrow
An escrow is an agreement in which a neutral third party holds legal documents and funds on behalf of both buyer and seller and completes the transaction according to their instructions.
An escrow agent provides a safe, convenient method for the transfer of real estate. Beyond that, your escrow agent prepares the instructions from the buyer and seller, receives funds from the buyer and/or the lender, opens the order for title insurance, pays liens and costs authorized by both parties, and prorates insurance, taxes, rent and interest on liens to be assumed.
What is a closing?
"Closing" is the final process necessary to complete a real estate transaction placed in escrow. This usually begins after there is a mutually accepted and signed sales agreement, and the appropriate documents are submitted to the escrow officer. In a typical sale transaction, "closing" takes place when:
1. Both buyer and seller have signed and fully executed the necessary documents
2. Buyer's money has been deposited into an escrow account
3. Lender has approved the signed documents and released them for recording
4. The new deed and financing documents have been recorded
5. Lender has wired or sent loan funds that are deposited and ready to disburse
The above steps must be accomplished before keys are released to the new buyer, unless there are written and signed instructions to the contrary. Likewise, all the above steps must be accomplished before the seller's proceeds will be disbursed.