What is Escrow?
“Escrow” is the process wherein a neutral, third-party is responsible for carrying out the buyer’s and seller’s instructions and paperwork relating to closing. Escrow can also refer to an account set up by the mortgage lender into which a portion of each mortgage payment is deposited to cover insurance and taxes, or an account set up to hold funds for needed repairs.
Escrow is the process wherein a neutral, third-party is responsible for carrying out the buyer’s and seller’s instructions and paperwork relating to closing. For instance, if the builder cannot finish a driveway until spring, the funds would be held in an escrow account until the work is finished.
“Escrow” is the process wherein a neutral, third-party is responsible for carrying out the buyer’s and seller’s instructions and paperwork relating to closing. Escrow can also refer to an account set up by the mortgage lender into which a portion of each mortgage payment is deposited to cover insurance and taxes, or an account set up to hold funds for needed repair.
Escrow is a way of transferring or exchanging property and/or money using a neutral third party. In many jurisdictions, escrow agents constitute a distinct profession with its own training and accreditation requirements. In other jurisdictions, such as Canada, escrow functions may be performed by attorneys. In either case, the escrow process is covered by significant regulation and protection through the use of licensing and/or bonding. Escrow is most commonly associated with real estate transactions. When a home or property changes hands, the seller of the property transfers the property title to the escrow agent. Similarly, the buyer either transfers funds or has a bank transfer mortgage proceeds to the escrow agent. When all conditions of the purchase agreement are met, the escrow agent assigns the property title to the purchaser and distributes the funds to the seller. With the Internet age, escrow services have gone digital.
