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Escrow FAQ Part 1 of 4

By
Title Insurance with Stewart Title of California

What is escrow?

Escrow is a service which provides the public with a means of protection in the handling of

funds and/or documents. Escrow enables the buyer and the seller to transact business with each other through a

neutral party, thereby minimizing their risk. In the escrow, all parties involved give their instructions to this

neutral intermediary, the "escrow holder" whose duty it is to assure that no funds or property will change hands

until all instructions have been carried to completion.

What types of transactions go through escrow?

Most contracts that involve the transfer, lease or financing of

real or personal property can be placed in escrow. You may be involved in escrow not only when you buy or sell

a home, but also when you buy a mobile home, sell a business or transfer stock in a closely held business.

Prizefighters have even been known to have their purses guaranteed through an escrow depository. The buyer or

seller should demand the protection of escrow for any transaction which involves a substantial investment.

Why do I need escrow?

Whether you are the buyer or the seller, you want assurance that no funds or property

will change hands until all of your instructions have been followed. With the increasing complexity of business,

law and tax structures, it takes a trained professional to supervise the transaction.

Who handles the escrow transaction?

The escrow officer is a trained and experienced professional. He or she

can provide you with the assistance required to close your transaction quickly and effectively. This professional

person may, under the terms of the instructions, make the decision that the conditions of escrow have been met,

and then order the transfer of the affected real or personal property to the interested parties. Many escrow officers

proudly display their professional designations of certification and show these designations on their business

cards and letterhead. The designations indicate that this person has met the high standards of education and

experience required for certification by the California Escrow Association.

As a buyer entering into escrow, what must I do?

If the transaction is contingent upon a new loan, it is your

responsibility to arrange this loan. Your real estate agent can be most helpful in obtaining a lender, since he or she

is more knowledgeable about which lenders are currently active and their financing terms.