Real estate transactions involve numerous steps, from making an offer to closing the deal. One crucial component of this process is escrow, which is notably provided by attorneys or title companies. So, what is real estate escrow?
Understanding Escrow
Real estate escrow refers to a neutral third-party service that holds funds and documents related to the transaction until all conditions of the sale are met. This ensures that both the buyer and the seller fulfill their respective obligations before the property changes hands. The escrow process protects all parties involved by ensuring that no money or property is exchanged until every term of the agreement is satisfied. Escrow serves several critical purposes in a real estate transaction:
- Protection: Escrow protects the buyer’s deposit and the seller’s property. It ensures that the seller won’t receive the money until the buyer is satisfied with the property and all terms of the sale are met. Similarly, it protects the buyer’s deposit by holding it in a secure account until the transaction is completed.
- Neutrality: An escrow agent or company acts as a neutral third party, facilitating the transaction without favoring either the buyer or the seller. This neutrality helps prevent disputes and ensures that the transaction proceeds smoothly.
- Compliance: The escrow process ensures that all conditions of the sale are met, including inspections, repairs, and financing. It also ensures that all necessary documents are completed and filed correctly.
When all necessary documents have been received, reviewed, and signed by the escrow officer, and the funding of a loan is received, a transaction is considered closed. Upon closing, funds will then be disbursed from the escrow account to all third parties.
Escrow is vital because it ensures a fair and orderly transaction, protecting both parties from potential risks. For buyers, it guarantees that their deposit is secure and that they will receive a clear title to the property. For sellers, it ensures that they receive payment in full before the title is transferred.
The Law Office of Donna Hearne-Gousse is a fully licensed, insured, and bonded attorney-based title company with full escrow services. We invite you to contact us for more information regarding closing and escrow services as well as all areas of real estate law.
The Law Office of Donna Hearne-Gousse
(561) 582-5670