Escrow is a third party which is established during a real estate transaction. It is basically a joint account or a trust fund which is held as a deposit until the legal ownership of the property is transferred in the name of the seller or the sale of a real estate property has been fully accomplished. This account manages responsibilities like payment of property taxes, insurance, and related obligations while the house is still under mortgage. It ensures that no exchange of funds and properties takes place until all the instructions in the escrow agreement are met.
This party basically safeguards the rights of both the buyer and the seller.
Therefore close of escrow is just another term for closing. This is the last step after which the official transfer of property ownership is done.
This account is closed by the Escrow holder when all the terms and conditions in an escrow have been strictly met towards the end of the sale of the property. Then the Escrow holder can pay out the funds by paying the necessary bills like property taxes and insurance. The accounting of all these funds can be done through a closing or settlement statement. Doing this ensures greater transparency to the entire transaction that is it gives a clear picture of how the escrow took effect and how the funds were used in the entire process.
Therefore, once a deal has been formally signed and sealed by both the parties the Escrow is considered closed. The closing agent is the Escrow holder who also becomes the settler of the transaction. It is important that both the buyer and the seller are present at the time of close of Escrow as they would have to sign the papers. The buyer and the seller can also bring their lawyers along with them.
It is important to remember that both the parties should have a copy of all the documents related to the closing of the escrow along with the settlement statement. Both the buyer and the seller should also make sure that the necessary paperwork has been forwarded to the corresponding offices for the registering of deeds and transferring of titles. (After all the papers are signed, the mortgage note and the deed should be recorded at the registry of deed. The original deed can be obtained later from the registry of deeds of the county where the property is located.)
It important that you have a thorough knowledge and experience on how an escrow works as it would help you to make better and safer investments. Escrow helps in safeguarding your property and finances throughout any real estate transaction. Therefore, it is very important to get thoroughly acquainted with all the instructions given for it. If you have any doubts about any of its clauses, it is highly advisable that you consult a lawyer early on to prevent any problems later.
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