Escrow describes the third-party handling of funds, documents, and tasks that are specific to closing. The sole purpose of Escrow is to manage the disbursement of funds and documents.
The buyer and/or seller that is involved in a transaction selects the Escrow provider. You can defer to your Real Estate agent to make this decision if you aren't sure. The provider can be an escrow company, title officer, attorney, and can depend on the geographical location of the transaction.
The Escrow provider chosen arranges and tracks requirements and contingencies within the purchase contract, including home inspections, financial requirements, homeowners insurance, and any repairs that are negotiated during the sale.
Once all transaction documents are met, the Escrow company will disburse funds to the seller and all other parties in accordance with the purchase agreement. The cost of Escrow services are covered by the buy or seller. Once all tasks within the sales purchase agreement are completed, the transaction is complete and the Escrow closes.
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