Date Posted: 2012-07-03 10:01:46
Site Posted: Myproperty.ph
When a real estate transaction reaches its final stages, there are a lot of things that still need to take place before money and house keys change hands. Once the buyer and seller sign the sales contract, the next step is opening escrow. These are some of the things that you need to know about escrow and its importance in a real estate deal.
What is escrow?
Escrow is an arrangement wherein the money for purchasing the house or any property is deposited into a fund, and is not released as payment until a certain condition has been fulfilled. The purpose of having an escrow agent is to ensure that no money is paid until every single instruction dictated in the transaction has been completed.
When do you need it?
Some of the conditions when an escrow might be needed are:
· If the property being bought has unlawful tenants, and the seller has taken responsibility of ejecting them
· If there are annotations attached to the property, and the seller has assumed responsibility of their cancellation
· If the seller is still occupying the property, and he agrees to vacate within a given period
How does it work?
The way it works is that the people involved in the transaction (the buyer, the seller, the lender and the borrower) will create escrow instructions to be sent to an escrow officer, along with the buyer’s deposit. The officer processes the escrow based on the instructions given, and only when the conditions have been met will he release the deposit and officially close escrow. On the other hand, in the event that the deal falls through, the money is returned to the buyer.
How do you choose an escrow holder?
The principals of escrow have to reach an agreement as to which escrow agent to choose. It’s important that they choose an escrow holder who is highly experienced in real estate transactions to ensure that everything goes well from his end. Some of the responsibilities of the holder are:
· To follow instructions that the principals have given
· To manage the funds and documents as indicated in the instructions
· To pay the required fees as authorized by the people involved
· To close escrow once all conditions have been met
Remember that while a real estate broker can suggest an escrow holder, you still need to make the decision yourself in order get the best service while avoiding conflict. Escrow fraud happens, so be sure to choose only a licensed escrow company.
Jillian Cariola, Writer
(cover image from Fuzzy1)
Recently Posted Properties from Around the Web:
