How Does Escrow Work?

 

The principals to the escrow, buyer and seller, provide a contract in the form of a fully executed purchase and sale agreement. The agreement, once it is fully executed, is delivered to the escrow officer. If a loan is involved, they will normally provide the escrow officer with the contact information necessary to coordinate with the lender to secure the loan documents needed for closing.

The mutual escrow instructions are customarily prepared by the escrow company, which basically states that all parties have reviewed the title, agree to the terms of the purchase and sale agreement ,as well as any loan terms.

The escrow officer will process the escrow, in accordance with the escrow instructions and the purchase and sale agreement. Once all conditions of the purchase and sale agreement have been met, legal documents signed, and all funds have been received, the escrow will be closed. Each escrow, although following a similar pattern, will be different in some respects, as it deals with YOUR property and the transaction at hand.

The duties of an escrow agent include: following the instructions given by the principals and parties to the transaction in a timely manner; handling the funds and/or documents in accordance with instructions; paying all bills as authorized; responding to authorized requests from the principals; closing the escrow only when all terms and conditions have been met; and, distributing the funds in accordance with instructions and providing an accounting for the same – the closing, or settlement statement.  

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