You are in Escrow now, so what happens next?
Escrow is a process that evolved to ensure protection for all parties to a real estate transaction. A “neutral third party” or “stakeholder” that was nominated to hold the funds until the purchaser/buyer receives appropriate assurance (recording confirmation) that the property had been transferred. An escrow file may also be created for other purchases, although it is most commonly used during the transfer of real estate properties. Today the escrow file is overseen by an escrow Officer at an Escrow Company. All parties are protected because the escrow holder will retain funds and documents until all the instructions/agreement is fulfilled.
Here’s a list of steps you can expect when you open escrow.
Purchase Agreement is provided to escrow and reviewed by the escrow team.
Buyer’s deposit is received, and preliminary report is requested.
Preliminary report is received, reviewed and distributed.
Escrow instructions and documents are prepared and distributed as per local practice.
Information and signatures from principal(s) are requested. This includes payoff of underlying loans and Statements of Information from sellers.
Demand(s) are requested and received.
Data entries are made for payoffs, commissions, etc.
If financing is involved, loan approval is received and loan documents arrive from the lender.
Escrow prepares estimated closing statements for buyer’s and seller’s review and approval, together with seller’s CD, if required.
Buyer’s signing appointment is scheduled, documents are prepped for signing, escrow paperwork is added, and appointment with seller is made, if required.
Funds are requested and received from buyer and seller, if required. Upon receipt of buyer’s and seller’s funds as may be required, loan funds are requested from lender.
Upon receipt of all funds required to close, recordable documents are forwarded to county recorder’s office with authorization to record.
Disbursements are made and closing
packages are released.
Definition of “Escrow” from Black’s Law Dictionary
A writing, deed, money, stock or other property delivered by the grantor, promissor or obligor into the hands of a third person, to be held by the latter until the happening of a contingency or performance of a condition, and then by him delivered to the grantee, promissee or obligee. A system of document transfer in which a deed, bond or funds is delivered to a third person to hold until all conditions in a contract are fulfilled.
Fun Fact
Escrow practices evolved from English common law. The word “escrow” is actually derived from the Middle English (12th to 15th century) word for “scroll”, on which all of the escrow instructions and lists of properties were recorded.
