The term “escrow” is a confusing yet familiar word that home buyers and sellers often hear during home sales, especially in Smith Mountain Lake real estate. This blog post is here to help you learn more about this real estate term.
Multiple definitions
Perhaps one of the reasons why we’re often confused about escrow is the fact that it has several meanings. “Escrow” can be:
- the earnest money check you gave to an impartial third party while you and your agent negotiate for a purchase contract;
- the account (also called "reserve" or "impound") where funds for homeowner’s insurance and property taxes will be held.
Basically, an escrow is something of significant value that’s given to an impartial third party for safekeeping while negotiations are underway. When conditions are met, all payments made, and the deed is recorded with the country, the escrow can finally be closed.
An important figure
There’s always one individual that pops up in an escrow, and we already mentioned this fellow before. We’re talking about the impartial third party, a role played by either an escrow agent, a title agent, or a closing attorney (it depends on where you live).
So, why is he important? This impartial third party is the individual responsible for all incoming paperwork and money from all the people involved in the sale. Yes, that includes paperwork and money not just from buyers and sellers, but from agents, lenders, and other people.
To get into the specifics, the impartial third party is responsible a number of tasks, which includes the following:
- the arrangement of a title search
- disbursement of funds
- schedule of the closing meeting
Your escrow agent, title agent, or closing attorney will also make sure everything that needs to be recorded with the county is attended to and duly completed.
Other points to note
- There are times when funds are still held in escrow even after the close of sale, so don’t worry. This may be because you signed a "rent back" agreement or you aren’t satisfied with how some conditions were met.
- An escrow is closed if all paperwork is signed, all funds disbursed, all documents recorded with the country, and the property title is transferred to you. A closing statement will be given to you. Don’t forget to read it and contact your closing agent immediately if there are any errors. Don’t lose your copy of the final closing statement — you’ll need it to file your next income tax return.
For more information about escrow, hit me up at Jane(at)JaneAtTheLake(dotted)com or give me a call at 540.493.1690 or 800.858.4653.