The Closing of Escrow and Its Relevance to Real Estate

You might have encountered the word escrow when you talk of real estate. If you are a first time buyer or seller of property, the broker or your legal counsel might have suggested such thing. Of course, you will definitely ask what exactly does this escrow mean? What is its importance to every property buying or selling process? In a very simplified explanation, escrow is a deposit of cash, a deed or any other instrument by one party for the delivery to the other party until a certain event or transaction is completed.

Basically, when you are doing any real estate date, regardless if you are a buyer, seller or lender, you will certainly need an assurance. You want to be secured that no amount or property will be exchanged not until all of the procedures in such transaction are observed. The escrow holder has the right to keep the funds and other important documents while they are in the hands of the escrow holder, and to give out cash and give the title only when all policies of the escrow are already complied.

Closing of escrow is said to necessary and very vital due to several reasons. Initially, the two parties, the buyer and lender, who are involved in the negotiation or creation of the escrow account, do not have the right to operate the close of escrow. A third party is necessary to implement the procedures of closing the transaction which could be performed by the bank in charge of the property or the deal, or a closing agent, both from the parties of the buyer and seller as well. Closing of escrow is an essential step that includes the transfer of the title deed from the owner to the probable buyer or future owner. The closing in-charge will be asked to implement and carry out all the required transactions from the processing of the documents and paperwork up to the transfer of such documents. When the escrow holder provides the statement on the receipt and payment done by the two involved parties, then it would officially mean the turning over of the acquired property.

In addition to that, close of escrow in the real estate business is to guarantee the security and assurance of parties, the buyer and seller, in the investment they are engaging in. Of course, both parties are expected to be protective on their investments. The buyer is concerned on his money, and the seller takes full responsibility on his property. While closing escrow is in process, essential factors are considered such as the computation of insurance by the closing agent on the buyer’s side. This will certainly assure the probable owner of the house that which is about to be used and own the property, free from all the issues and predicaments whenever future matter concerning the house may come.

Normally, in a close of escrow, escrow handlers are joined by legal counsels who are given by the bank in charge. Thus, all parties will realize that such transactions undergo legalities and procedures in accordance to the law.