Escrow F A Q 's
The dictionary definition of escrow is a document, deed, or monetary instrument deposited with a neutral third party, to be delivered to grantee upon fulfillment of specified conditions. So to break it down...In a real estate transaction, the buyer is depositing funds with escrow and the seller a "deed", which shall be conveyed to the buyer once the contract obligations have been satisfied. Once the deed is conveyed to the buyer (recorded) the funds are released to the seller.
Who selects the escrow
The selection of the escrow company is negotiable between Buyer and Seller. However, it is often the listing or selling broker who suggests a particular escrow company as they may have working relationships with various people or companies in the industry. Make no mistake though, that it is ultimately the choice of the Buyer and Seller as to which closing company they would like to use.
Is escrow and title the
No, Title Insurance or "Title" is the function of an insurance company producing a title report showing matters of record that are attached to a property such as easements, mortgages, deeds, etc. The title company eventually issues a title insurance policy upon closing.
Some title insurance companies have escrow departments within their company, but the primary focus is title insurance not escrow. Escrow works closely with the title insurance company which provides for a checks and balances system to make sure all matters pertaining to the title report and legal documents are accurate. We work with all Washington State title insurers and will gladly coordinate title insurance through the company of your selection.
What does escrow
Escrow has a myriad of duties in the transaction, but these are a few of the major duties:
Clearing title - This involves a thorough review and verification of the information contained in the title report and in some cases, research or additional work may be necessary for your escrow team to cure title defects to be sure that the Buyer has clear title at closing. No two transactions are alike, however some have common elements which is why having an escrow team with years of closing experience and a "can-do" attitude can make the difference between closing and not closing when a challenge arises.
Obtaining and verifying all monetary items to be handled through closing. This pertains to items that will be paid and or pro-rated at closing. Some of the most common items are mortgage payoffs, HOA dues, leased utilities, assessments, real esate commissions, lienable utility bills, and property taxes.
Document Preparation - Another function of escrow is to select and prepare certain legal documents for the transaction, such as the Statutory Warranty Deed (or other deed as dictated in your contract), which transfers title from the Seller to Buyer, and the Settlement Statement, which outlines all of the closing costs for the transaction. Your closing documents have legal ramifications, which is why it is extremly important to choose an excrow company that is competent, educated, and attentive to every last detail.
Handling of Funds - As the neutral third party it is our duty to maintain client's funds in our trust account until the transaction is closed. Once the transaction closes we disburse the funds to pay off existing mortgages, pay real estate commissions, utility bills, and other settlement costs, and then disburse the final proceeds to the Seller.
Closing costs vary based on each individual transaction and circumstance.
Sellers can utilize our net proceeds calculator here.
Buyer's closing costs will vary dramatically based on lender and loan program, so it is best to contact your lender for a loan estimate to determine costs as a purchaser.
Go here for a list of closing costs that customarily pertain to buyers and sellers.
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