Definition of Escrow
An item of value, money, or documents deposited with a third party to be held, then delivered upon the fulfillment of a condition. For example, the deposit of funds or documents withan escrow holder to be disbursed upon the closing of a saleof real estate.
Whether you are a buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until all of the instructions in the transaction have been followed.
The escrow holder has the obligation to safeguard the funds and/or documents while they are in his/her possession and to disburse funds and/or convey title only when all provisions of the escrow have been complied with in accordance with submittedinstructions.
The Escrow Process - In Short
Escrow instructions (most commonly in writing) are created, signed and delivered to the escrow holder. If a broker is involved, he/she will provide the escrow officer with information necessary for the preparation of the escrow instructions and documents.
The escrow holder will process the escrow, in accordance with the escrow instructions. When all conditions are met, the escrow will be "closed."
Remember: All escrows are different, according to the type of property and complexity of the transaction.
The duties of an escrow holder includes; following instructions from the principals and parties of the transaction;handling funds; paying all bills as authorized; closes escrow when all terms of the instructions have been met and read; prepares final statements for the principals and parties involved and accounting for the disbursement of all funds deposited in escrow.