What Exactly Is An Escrow?
An escrow occurs when a neutral third party holds the documents and
monies involved in a real estate transaction and ensures that all
conditions of the transaction are met. Escrow also refers to a special
account that a lender establishes to hold monthly installments from
the borrower to cover property taxes and insurance.
What Does An Escrow Holder Do?
An escrow holder is a neutral third party who takes instructions
based on the terms of the real estate transaction and, when necessary,
the lender's requirements.
What Are The Duties Of The Escrow Holder?
 Receiving
and holding all monies, instructions, and documents pertaining
to the real estate transaction.
Serving as
the communication link and liaison between all parties.
Requesting
a preliminary title search to determine the condition of title
to the property.
Requesting
a beneficiary statement or payoff demand from existing lenders.
Holding inspection
reports, deeds, and insurance documents.
Complying
with the lender's requirements in its instructions to escrow.
Preparing
or obtaining the grant deed.
Prorating
taxes, interest, insurance, rents, and other costs related to
the property.
Recording
the deed and other documents.
Requesting
the title insurance policy.
Closing the
escrow according to the instructions of the buyer, seller, and
lender.
Disbursing
funds as authorized by the instructions, including charges for
real estate commissions, loan payoffs, title insurance, taxes,
recording fees, and other costs.
Preparing
final statements of disposition of all funds.
Key terms and phrases commonly associated with escrow include:
Escrow payment:
Funds that a mortgage servicer withdraws from a borrower's escrow
account to pay property taxes and insurance.
Escrow analysis:
A lender's periodic examination of an escrow account to determine
if the lender is withholding enough funds from a borrower's monthly
mortgage payment to pay for expenses such as property taxes and
insurance.
Back-to-back escrow:
Arrangements that an owner makes to oversee the sale of one property
and the purchase of another at the same time, also known as a concurrent
closing.
Escrow closing:
An escrow closing occurs when all conditions of a real estate transaction
are met and the title of the property is transferred to the buyer.
Escrow Company:
A firm that acts as a neutral third party to ensure that all conditions
that the buyer, seller, and lender establish in a real estate transaction
are met.
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