Escrow is a term that many have heard of, but seldom know what it actually means. It is the legal process of transferring a property title from one owner to another.
In other words, escrow is a clearing-house for all funds and documents to sit until all real estate transaction conditions are adhered to before moving forward with the sale. This is a form of legal protection for both the buyer and seller to reduce the risk of fraud or violation of agreement terms.
When is Escrow Opened?
Escrow is usually opened when both the buyer and the seller have reached an agreement on price and terms, and are prepared to move forward with the sale. Escrow is then opened once all parties have signed the purchase and sale agreement, and it can remain open for as long as necessary. The selling agent is the one who normally opens the escrow.
Escrow instructions often include:
- Purchase terms and conditions
- Purchase price
- Record matters
- Closing details
After escrow has been opened, the escrow officer then asks for a title report from a title company. The title company quickly prepares a preliminary report and then looks for any encumbrances of liens against the said property. They also investigate the chain of title. After this report is prepared, the buyer is given several days to review any findings.
Why Open Escrow?
Perhaps the most significant reason for opening escrow is “Concurrent performance”. This simply means that the grant deed is recorded on the day when loans, termite clearance, and inspection and title fees have been fully paid. Escrow basically guarantees that a buyer’s hard-earned money is well taken care of in a legal and timely fashion. Your real estate agent will likely recommend you to an agent who can open escrow for buyers and sellers.
Select Quality Real Estate Title Company
Selecting the right real estate title company can certainly make the difference between an on-time and stress-free closing and a closing that is delayed or problematic. You can be sure that Title Lab’s escrow services will offer you a safe purchase process for real estate. Call us today on 305-440-4150 to find out how we can help you with your real estate transaction.
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