With my recent posts about "Escrow Accounts" some folks have emailed me questions about what "Escrow" really means.

I want to clear up a few points....

What is "Escrow" or "Being in Escrow"  compared to an "Escrow Account" ??

In different parts of the country we have different words, language or terms for the same thing (or process).  It is like saying  'Toe-may-toe' or 'toe-ma-toe' ... 'pea-can pie' or 'peh-con pie'.  Well you get the idea...

So in terms of "Escrow" there are a few things I perhaps should have started with before I posted a blog read by people from all over the country.

There are Title Companies  also known as 'Escrow Companies'

When you make an offer on a property you typically place your Earnest Money deposit in "Escrow"with either your Real Estate Brokerage or the Title/Escrow Company.  This money is put TOWARDS YOUR CLOSING/DOWNPAYMENT costs.

When you have a purchase contract accepted by both buyer & seller you are said to be "Under Contract"  OR "IN ESCROW".  Same basic thing - just depends what part of the country you are from.

Lenders (most of the time) set up an 'ESCROW ACCOUNT' whereby a portion of your Monthly Mortgage Payment is placed into; so they (the lender) will be able to pay your Property Taxes and Home Owners Insurances.

Basically this : An "Escrow Account" by definition is (per Wikipedia) a legal arrangement in which an asset (often money, but sometimes other property) is delivered to a third party (called an escrow agent) to be held in trust pending a contingency or the fulfillment of a condition or conditions in a contract such as payment of a purchase price. Upon that event occurring, the escrow agent will deliver the asset to the proper recipient, otherwise the escrow agent is bound by his or her fiduciary duty to maintain the escrow account.

So next time you read about "Escrow" - make sure you know what kind of Escrow or escrow account you are reading about.

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