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Escrow Process and its Know-Hows
1. Defining Escrow
Escrow is defined as a process where parties deposit instructions and funds with a trustworthy third party until conditions of the instructions/agreement are fulfilled. Once the condition is met, the escrow agent (third party) will deliver the asset to the actual recipient, otherwise the escrow agent is bound by his/her duty to maintain the escrow account.
2. How is an escrow started?
If you are working with an agent, your agent will "open escrow" for you by depositing your earnest money check and the purchase contract with an escrow/title company or attorney. The mutual agreement for the payment is made between the parties.
3. How will you hold title to the property?
Ways of holding title (such as sole and separate, joint tenancy, community property with right of survivorship) vary by state. Most escrow companies provide information on what applies for your state, but you may want to consult an attorney for legal advice for your particular situation. This decision should be made immediately along with exactly how you want your name to appear on all documents as this will help to prepare the documents correctly. If you decide later to change how you want to hold title or how your name should appear, these changes may delay your escrow closing.
4. How is the escrow closed?
The escrow agent or attorney will make sure all contract instructions are met. They will monitor deadlines and compliance such as for home inspection, loan approval, termite report etc. If you are the vendor, you will sign documents to transfer the property or the source code in regard to software development, to the buyer. If you are the buyer, you will bring required funds to the closing appointment, and sign documents and other legal papers. The escrow is then closed.
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