What is Escrow?
Escrow is defined as "a deposit of a deed or other instrument with a third party for delivery upon performance of a condition."
What is the role of the escrow agent?
The Escrow Agent is an unbiased third party charged with closing the transaction (the escrow) in accordance with written instructions (the Contract) from the Parties (Buyer and Seller) and the Lender.
The Escrow Process…
The life of the escrow may be long or it may be short, but there are five basic steps to each escrow:
- Opening
a. The Realtor provides Escrow with the contract and earnest money deposit
- Signing
a. Seller and Buyer attend a signing or documents are sent out for signature and returned
- Funding
a. The Buyer pays closing funds by cashier's check or wire transfer
b. The new Lender funds the loan by check or wire transfer to escrow
- Closing — Recording
a. The closing documents are recorded by the title company
- Disbursement
a. Escrow disburses the monies in accordance with written instructions
What can escrow do?
Close the transaction in accordance with the terms of the contract, counter-offers and addendums.
What can't escrow do?
Anything that is not in the contract, counter-offers and addendums.
In addition, there are some other functions that the Escrow Agent is prevented from performing, due to reasons of liability, legal restrictions or because of its neutral position, such as:
- Give advice
- Negotiate
- Prepare contracts, counter-offers or addendums
- Prepare legal documents beyond the basic "fill-in-the-blank" forms
"Practicing law without a license" includes, but may not be limited to, all of the above items.
