What is Escrow?
Escrow is the process by which the interests of all parties in a real estate transaction are protected, ensuring that all conditions of the sale have been met before property and money change hands. Escrow is an independent depository wherein all funds, instructions, and documents for the purchase of your home are held, including your down payment, your lender's funds, documents for the new loan, hazard and title insurance, other difines contingencies, and the grant deed from the seller. At the close of escrow, the "escrow holder" delivers these items to the appropriate parties, disburses the funds, and handles the associated paperwork.
What is an Escrow Holder?
The Escrow Holder is a neutral third party, such as Freedom Title & Escrow LLC, that maintains the escrow account and impartially oversees the escrow process, making sure all conditions of the sale are properly met.
The Escrow Holder's Duties:
- Serving as the neutral agent and the liaison between all parties involved.
- Requesting a preliminary title search to determine the status of title to the property.
- Requesting a beneficiary statement of debt or obligations are to be taken over by the buyer.
- Requesting a payoff demand from beneficiaries when the seller is paying off debts.
- Complying with the lender's requirements as specified in its instructions to escrow.
- Securing releases of all contingencies or other conditions imposed on the escrow.
- Preparing or securing the deed and other documents related to escrow.
- Prorating taxes, interest, insurance, and rents.
- Preparing escrow instructions.
- Receiving purchase funds from the buyer.
- Receiving loan funds from buyer's lender.
- Closing the escrow pursuant to instructions supplied by the seller, buyer, and lender.
- Recording the deed and any other documents.
- Disbursing funds as authorized by the instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs.
- Preparing final statements for all parties involved that account for the disposition of all funds held in the escrow account.
- Requesting the title insurance policy.
The Escrow Process
In Florida the seller's agent typically opens the escrow as soon as the purchase agreement becomes effective. The buyer's agent will deliver the deposit(s) to the escrow agent as required by the purchase agreement. The escrow cannot be closed until all transaction contingencies are satisfied and the parties to the transaction have signed the escrow documents. The length of escrow can range from a few days to several months depending on the terms of the purchase agreement. However, escrow typically closing within 45 days. The cost of escrow services is covered by the buyer and seller as customary or dictated by the purchase agreement.
Contributor: Brad Brinkman
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