Escrow is one of the last stages in purchasing or selling real property. When someone says that they are “in escrow,” it means that they have either accepted an offer on the sale of their property or their offer to purchase has been received. The request to purchase agreement is the instrument that all parties first sign before they “go to escrow.” Although an escrow is not always required by law, it is a necessary process by which an independent, neutral third party handles the legal paperwork of a real estate sale.
The life of a typical escrow in a specific transaction follows these basic steps:
Escrow instructions are prepared along with other pertinent documents, and signatures are obtained.
A title search is ordered, and all parties receive a preliminary title report and send it for review and approval. Demands for payoff are contained on existing money liens, and clarification is requested on tax liens and other liens. While the escrow officer is processing the file, the lender for the buyer is also processing the loan application. Suppose the buyer is assuming the existing loan. In that case, the escrow officer requests a beneficiary statement, forwards it to the buyer for review and approval, and requests loan documents for transfer or the new loan.
Once documents are received, the file is “figured” and reviewed to determine that all conditions have been met and all documents have been appropriately prepared. Funds are obtained from the buyer, signatures on loan documents are accepted, loan funds are requested and received, and recording is ordered from a title company.
All escrow instructions are confidential, and the buyer or seller can authorize disclosure.
Keep in mind that there are some differences in how the escrow process is handled on the east coast compared to the west. In addition, there are many other occurrences in the life of an escrow, and each one is unique because it involves exceptional circumstances and individuals in the actual property transaction.
by Nef Cortez