A real estate escrow title company is often called upon to provide services such as collecting funds such as down payments and handling legal documents such as titles and deeds when in the process of purchasing a property. Escrow accounts are held by an unbiased third party. The idea behind this is that if the transaction falls through one party does have possession of the legal documents while another party is excluded. In the event of a disagreement, these things stay locked in escrow until such a time that a suitable agreement can be reached between the various entities involved in the transaction.
What does the escrow company do?
The escrow title company is responsible for acting as the impartial trustee of documents and funds. The escrow agent coordinates these documents and funds and handles how they change hands.
The escrow agent also serves as the messenger to keep all involved parties informed, answering all questions and concerns of the financier, obtaining title insurance in regions where this is required, collecting all documents needed to prove that the property is in order for sale such as inspections, calculating the prorated tax and rent figures, calculating the gross taxes required, and recording all of the necessary documents according to legal requirements.
Escrowing Provides Protection for Everyone
Using an escrow agent provides a level of protection you could not achieve otherwise. Without the escrow account, you would have to pay your funds directly to the buyer or the other party in the transaction. Though most people are honest, the fact is in the past there have been situations when the person receiving the money used it improperly. An escrow agent insures this does not happen by holding the funds in an account that neither the buyer nor seller can access.
The escrow agent also holds the documents that will be needed for settlement of the transaction. The escrow agent may hold the deed or loan commitment documents. Funds and documents are not released until the agent is instructed to do so by the buyer or seller depending upon who has the authority.
A real estate escrow agent can be instrumental in insuring a real estate transaction flows smoothly. He or she has responsibility for making sure paperwork is properly completed and that problems which arise are addressed in a timely manner. An escrow agent also prepares settlement documents and then records the transaction at the courthouse. The agent serves as a single point of contact for the sale process.
A transaction is completed once money is released from escrow and title is transferred to the new owner.
Setting up an Escrow Account
An escrow account is an account used to hold money paid and documents created during a series of transactions. Lawyers, mortgage lenders, and title insurance companies are just a few of the people who use escrow accounts. In the case of real estate transactions, title insurance company agents act as the impartial participants in the transaction. The agent accepts funds paid and any of the documents that are considered to be part of the process and holds both in the safety of escrow.
Escrow Requirements for title companies
In some regions, some of these tasks are completed by other parties. For example, the filing of documents is often completed by a real estate lawyer instead of the title company. However the above mentioned responsibilities are a basic outline of what one should be able expect from their title company.
For this reason it is of an utmost importance to insure that the title company you choose is going to be one that is both reliable and well known. By finding a company that comes with high recommendations and confirming with the Better Business Bureau that they do not have a negative track record, you are going a long way to insure that you are with a company that can protect you.
It is quite important when transferring property to make sure that the money is properly transferred between parties so there are no disputes later. It’s also important to be sure that the buyer gets a title to the property that is free of liens or claims by third parties. Title insurance helps to prevent challenges against the title later on. However obtaining this insurance is also the responsibility of the real estate escrow title company.
In a real estate transaction, money is held in escrow and title is cleared and transferred to the new owner when all required transactions have been completed. When buyer and sellers come together in a business arrangement involving real estate, at some point money is going to be exchanged and agreements signed. A buyer and seller each have their own self-serving perspective which only makes sense, because each wants to do whatever is best for their situation. Having a disinterested third party provides insurance that the transactions are impartially completed.