What exactly is escrow and how does it work for the purchase of a property?
Escrow refers to a neutral third party that is responsible for transferring or exchanging assets, usually property and money. Escrows are represented by agents in charge of the account of a determined escrow company.
When you purchase a house, after all negotiations have been finalized and papers have been signed, the seller places the property title in an escrow account. Here, it is kept under safe keeping until the buyer transfers the money into the escrow account for the purchase of the property (title). After a certain period of time, and upon the closing of the escrow, the buyer receives the title of the property, and the seller receives the funds from the escrow account.
Purchase or trust transactions can be closed without escrows, but if the client simply wants piece of mind by going through an escrow so every step and document is accounted for by a third party, it will serve to protect all parties and ensures the broker and agent’s commission payment as well as the payment of applicable taxes. The escrow account or agent is solely responsible for disbursement of the funds and delivery of title.
It is highly recommended that you always use an escrow when purchasing property. In more complicated or higher priced deals, an attorney can assist you in creating an escrow account to make sure all parties are properly taken care of. Either the seller or buyer may choose the escrow company. Excluding personal preference, as long as it is a reputable company, any escrow company will work. Because it is a neutral third party and the escrow company really does not have a personal interest in the transactions under formalization, you can consider it a safe place for your assets until the operation is complete.
If you have any questions and would like information, feel free to contact us by telephone, email or stop for a visit, we will be happy to answer all your questions.