The Escrow Process
The escrow process is the mechanism by which funds and documents related to a real
estate transaction are assembled and conveyed to the appropriate parties.
The process is administered by an escrow company which, despite typically being
chosen and paid for by the buyer, actually represents both the buyer and seller
in the transaction. The company essentially insures that the sale closes on time
and in accordance with the terms of the contract.
In order to accomplish that goal, they hold the earnest deposit monies in escrow,
order & review the preliminary title report, obtain title insurance for the buyer
and mortgage payoff information for the seller.
In addition, they are also responsible for calculating the settlement statements
(the ubiquitous and infamous HUD 1) to insure that all of the closing
figures are correct (including prorations, when required), arranging for both parties
to sign all necessary documents, receiving funds from the lender, distributing those
funds and making sure that everything is in order prior to recording.
In most cases, these companies will assign an individual escrow officer to administer
your transaction and it will be that person’s responsibility to keep all parties
informed of progress on the file and if any problems are encountered.