What Is Escrow?
It all started with a vision to ‘streamline the escrow process, both real and personal property’ and as we celebrate our 10th Anniversary I thought it might be a refresher to define the exact purpose of Escrow. Escrow is sometimes known in other parts of the US as Closing, Settlement, etc and the information presented here was taken from a pamphlet prepared by the Escrow Institute of California to be handed out by escrow companies to their clients. We decided to present it pretty much as written because escrow companies very rarely get to explain what goes on in escrow in their own words. Usually your lender or Realtor explains the function of escrow to you:
Prepared by the Escrow Institute of California
Escrow: What is it?
Very simply defined, an escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a particular condition or event. The California Escrow Law: Section 17003 of the Financial Code: provides the legal definition.
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.
Escrow: How Does it Work?
The principals to the escrow: buyer, seller, lender, And borrower: cause escrow instructions, most usually in writing, to be created, signed and delivered to the escrow officer. If a broker is involved, he will normally provide the escrow officer with the information necessary for the preparation of your escrow instructions and documents.
The escrow officer will process the escrow, in accordance with the escrow instructions, and when all conditions required in the escrow can be met or achieved, the escrow will be “closed.” Each escrow, although following a similar pattern, will be different in some respects, as it deals with your property and the transaction at hand.
The duties of an escrow holder include; following the instructions given by the principals and parties to the transaction in a timely manner; handling the funds and/or documents in accordance with the instruction; paying all bills as authorized; responding to authorized requests from the principals; closing the escrow only when all terms funds in accordance with instructions and provide an accounting for same: the Closing or Settlement Statement.
Over the past several years we have provided electronic escrow and e=Closing services and will continue to assist moving the Industry towards a complete electronic and paperless Real Estate escrow transactions – from Opening through Closing. We applaud our ‘early adapters’ customers for sharing our vision!