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What is an ARC FAULT

Escrow is a process that provides for a fair and equitable transfer of property from one person to another.



By Broderick Perkins



Escrow opens when the buyer and seller sign a sales contract, commonly called a real estate purchase agreement and receipt of deposit. The contract, along with any additional instructions, serves as instructions for the escrow officer.

Escrow assures that the lender releases the home purchase funds at or about the same time that the deed is recorded to reflect new ownership.Escrow includes depositing, with a neutral third party, funds, documents and instructions necessary to complete the transfer.

Because the real estate transaction involves large sums of money and reams of documentation, escrow is not always a predestined, step-by-step process, but can become a confusing end game of details, nit picking and overlapping procedures. It requires preparation, attention to detail, and desire from both sides to close the deal.

Regional custom will dictates who (the buyer or the seller) chooses the neutral third party and who that third party will be. A neutral third party can be an escrow officer from an escrow company, someone from a title company or from a title and escrow company. Some regional areas use title and escrow attorneys. Custom and market conditions also dictate which escrow costs the buyer or seller pays. The amount typically totals about 1 to 2 percent of the cost of the home.

Choosing an escrow officer is much like choosing any real estate professional. Get several referrals from trusted people, then compare services, cost and convenience.

Your escrow officer opens escrow by assigning your escrow an account number and collecting the contract and other instructions, the buyer's deposit and perhaps additional proceeds or documents related to the transaction. Deposits are either applied to the purchase price, or returned should the deal fall through.

The buyer orders title insurance, to protect him or her against blemishes on the title, and he or she orders a preliminary title search to determine if there are any claims against the title.

The contract and escrow instructions likely contain contingencies for home insurance, flood insurance, home inspections, financing, repairs and other tasks either the buyer or seller must complete before the transaction can progress. Each time a contingency is met, the buyer or seller signs off with a contingency release form or letter copied to all parties, including the escrow officer.

At some point, parties will receive a preliminary title report which summarizes the condition of the title, including easements and liens, claims and encumbrances against the property. The seller must resolve any claims against the title, or they could stall the deal.

The title company may check once again and produce a final report to be sure existing claims have been removed and that no claims have been filed since escrow opened.

Once the loan is funded, contingencies are released, the title is cleared, the buyer inspects the property and decides how to take title, only a few loose ends must be tied before close of escrow.

Remaining paperwork to sign a few days before close includes the buyer's grant deed, any final escrow instructions or contingency releases, the settlement sheet of disbursements, title reports, the deed of trust lender forms, inspection reports, tax statements -- and a rental agreement if the seller will live in the home for some time after escrow closes.

Escrow closes and the deal is sealed when the escrow office records a new deed in the buyer’s name, the seller gets paid for the home, and all other monies are disbursed.

Money may be held in escrow after the close to pay contractors for unfinished work.







Escrow Process and Final Settlement


What is an Escrow?

Escrow is the deposit of documents and funds with a neutral third party with specific instructions as to how they should be disbursed.

Escrow acts as the clearing house for the exchange and distribution of those documents and funds in connection with transfer or financing of real property.

Someone from the Hoffner Team will attend the escrow settlement with you to verify the transaction closes as agreed.

The escrow officer, an employee of the title insurance company will, acting as a neutral 3rd party, explain the documents and have you sign them. The officer will then assure completion of transaction by delivering to the lender for verification and document recheck and deliver to county for recordation of your deed.

Why is escrow important to me?

Escrow, or the services of a qualified escrow agent, assures all interested parties that the rules and regulations governing real property transfers will be strictly observed by a neutral third party with an objective interest in completing the transaction.

An escrow agent represents neither the seller nor the buyer. The escrow agent can act only on each party's behalf according to their written instructions.

What escrow services does the title company provide?

The basic definition of an escrow agent's responsibility is to accept and hold a deed from the seller in exchange for funds from the buyer. The escrow agent will concurrently, when all mutually agreed terms have been satisfied, release the funds to the seller and deed to the new buyer.

In most sale transactions, this “simple” process requires the escrow agent to perform the following:

•Order a title report on the subject property and obtain all the necessary information to clear all title defects and satisfy existing liens and encumbrances against the property or the principals involved in the sale;

•Work with the buyer's lender to insure instructions from the seller, buyer and lender are coordinated;

•Prepare many of the documents necessary for the transaction and review all others to make certain they conform to the parties' demands;

•Figure tax and interest prorates and prepare closing instructions and statements for both buyer and seller;

•Arrange closing appointments for all parties to sign the necessary documents;

•After taking final signatures, the escrow agent has responsibility to complete the transaction by checking all documents for completeness, compliance and accuracy;

•Return copies of all loan documents to the lender for approval to record;

•Record all necessary documents in the county where the property is located. This is when the transaction is closed;

•Disburse all funds out of the escrow account according to the signed, written instructions. (These funds could include the seller's net proceeds, the Broker's real estate commission, and other payments required for loan approval or to satisfy other terms of the agreement.)

•Prepare and distribute final closing statements to all interested parties.

How much does an escrow cost and who pays for it?

In a typical sale transaction, the escrow fee is based on the purchase price. In Texas this fee is traditionally paid by the seller. Escrow fees are a negotiable item subject to agreement between the parties. If the sale transaction involves a federally guaranteed VA loan, the buyer is not allowed to pay any escrow fees and the entire amount will be paid by the seller.


Information is deemed reliable but not guaranteed.

Also see: Costs, Title Insurance Companies & Videos on closing fees and Title  rates


Other sources:


What is escrow?

  1. Wikipedia - click here