Escrow: To complete the sale of a property, a neutral, third party (the escrow holder) is brought into the picture to assure the process will close appropriately and on time. Escrow agents hold money for "safe-keeping" in an exchange between a buyer and seller. For example, in an Internet purchase, PayPal is the neutral third party that holds the buyer's cash, and then sends the payment to the seller.
The escrow company makes sure that all terms and conditions of the seller's and buyer's agreement are met prior to the sale being completed. This includes getting payments and documents, completing required forms, and seeking out the release documents for any loans or liens that were paid with the transaction, assuring you have a clean title to your property before the purchase price is fully paid.
These are the legal forms that escrow companies usually compile:
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
Closing on the house happens when all of the procedures of the escrow are done. All payments owed and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the home is then given to you as new owner and related title insurance is issued as noted in the escrow instructions.
At the close of escrow, in an acceptable form to the escrow. You'll know when it's time to submit the form of payment.