An escrow account is an account set up during real estate transactions, and is held by a third party, apart from the buyer or seller. Normally, the bank or lending institutions hold these accounts and are responsible for ensuring that funds are transferred from the account as per the agreement executed.
The account is a joint account and has funds from both parties. It is a highly responsible position to be in and not only involves the financial aspects of the transaction. Even the documentation is included in the escrow arrangement and it is the holder's responsibility to make sure that documents end up in the right hands.
Closing of escrow is normally done once all transactions are completed. Once all transactions are completed and related payments are done, the holder of the escrow account produces a statement which carries, in detail, all transactions related to the real estate deal. On this date, the property legally changes hands and the title is transferred from the seller to the buyer. The insurance is also transferred on this day.
An escrow closing is the climax of the transaction. Normally, the grant deed is recorded in the relevant registry within one working day of the escrow holder receiving loan funds. This is the last step which indicates close of escrow. All these formalities are taken care of by an escrow officer, appointed by the escrow holder. After he is satisfied that all conditions have been met, he informs both parties about the closure date of escrow. After the closure is formally done, the relevant papers are distributed and subsequent entries made in the records office.
It is important that along with the officer, your agent is also involved in the closure. This makes sure that no points are left unattended and that payments made are as per agreement. Insurance is always a very tricky and expensive matter, hence needs utmost caution. Your agent can be a real estate agent who knows the documentation of a sale as well as escrow dealings.
The escrow officer follows instructions as per conditions laid out in the agreement. Only after all pre-requisites concerning the property have been met, shall only be funds disbursed to the seller. Escrow account also disburses funds related to real estate agent fees or any other closing fees as deemed appropriate.
As a normal case, escrow is not related to real estate alone. This type of account is also opened in case of major business transactions and deals outside the real estate market as well. Sometimes, funds that are under litigation are transferred to an escrow account held by a neutral party till such time as the destination of these funds are determined by the honorable court of law. These funds are huge and may run into millions or even billions of dollars.
By Ravisankar Poduval
PressSearch.org
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