ESCROW
You may have already heard phrases such as "The house fell out of escrow," or "We're waiting for escrow to close." So just what is escrow anyway? And what does it mean to a home buyer or seller?
Simply stated, escrow is the involvement of an impartial third party in a real estate transaction. This neutral third party acts as an intermediary between the buyer and seller, and also collects and remits funds as instructed. Generally, this means that when you buy a home~ you do not pay the seller directly. Instead, you deposit funds with the escrow company that are then remitted to the seller on your behalf The basic concept of escrow is to ensure that both the buyer and the seller are protected during any real property transaction. Not only is "Escrow" the concept of a third party receiving and disbursing funds, but it also includes other valuable transaction services. In order to facilitate the transfer of property from one owner to another, the best escrow companies will:
· Determine the legal ownership and status of the property through a "Title Search".
· Request a beneficiary's statement if a debt is to be assumed by the buyer.
· Confirm that the buyer is qualified and meets the lender's requirements.
· Confirm property meets requirements imposed by lender and/or buyer.
· Prorate all related financial matters (e.g., taxes, insurance) involved in the ownership transfer.
· Ensure all legal documentation is complete, including recordation of the deed.
· Comply with time limits imposed in instructions.
· Close escrow when all instructions (buyer's, seller's and lender's) have been fulfilled.
· Disburse funds as instructed, including all related fees (title fees, commission, payoffs, etc.)
· Prepare final statement for all concerned parties.
Escrow operations are licensed by the State of Arizona, and their records are open to inspection by the Insurance Commissioner and the State Banking Department. Thus, the state helps ensure that escrow companies are properly managed and truly act as impartial parties to any real property transaction.
No changes may be made to the purchase contract without the consent of the parties to the transaction. Finally, all escrows have clearly defined time limits. It: for some reason, all terms of the purchase contract, cannot be carried out by the end of the time limit, all parties involved are entitled to the return of documents, fees, funds and other related materials. They also may mutually agree to extend the time period by amending the purchase contract.
The term ''Escrow'' has come to mean ''Neutral Protection" for. the seller, the lender and the buyer. All parties involved in the transfer of real property are impartially protected during the transaction, and are serviced by professionals intent on ensuring a smooth, trouble-free sale.
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