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The Functions of an Escrow

Buying or selling a home (or other piece of real property) usually involves the transfer of large sums of money. It is imperative that the transfer of these funds and related documents from one party to another be handled in a neutral, secure and knowledgeable manner. For the protection of buyer, seller and lender, the escrow process was developed.

As a buyer or seller, you want to be certain all conditions of sale have been met before property and money change hands. The technical definition of an escrow is a transaction where one party engaged in the sale, transfer or lease of real or personal property with another person delivers a written instrument, money or other items of value to a neutral third person, called an escrow agent or escrow holder. This third person holds the money or items for disbursement upon the happening of a specified event or the performance of a specified condition.

Simply stated, the escrow holder impartially carries out the written instructions given by the principals. This includes receiving funds and documents necessary to comply with those instructions, completing or obtaining required forms and handling final delivery of all items to the proper parties upon the successful completion of the escrow.

The escrow must be provided with the necessary information to close the transaction. This may include loan documents, tax statements, fire and other insurance policies, title insurance policies, terms of sale and any seller-assisted financing, and requests for payment for various services to be paid out of escrow funds.

If the transaction is dependent on arranging new financing, it is the buyer’s or the buyer’s agent’s responsibility to make the necessary arrangements. Documentation of the new loan agreement must be in the hands of the escrow holder before the transfer of property can take place. A real estate agent can help identify appropriate lending institutions.

When all the instructions in the escrow have been carried out, the closing can take place. At this time, all outstanding funds are collected and fees- such as title insurance premiums, real estate commissions, termite inspection charges- are paid. Title to the property is then transferred under the terms of the escrow instructions and appropriate title insurance is issued.

Payment of funds at the close of escrow should be in the form acceptable to the escrow, since out-of-town and personal checks can cause days of delay in processing the transaction.

The following items represent a typical list of what an escrow holder does and does not do:

THE ESCROW HOLDER:

  • serves as the neutral “stakeholder” and the communications link to all parties in the transaction;
  • prepares escrow instructions;
  • requests a preliminary title search to determine the present condition of title to the property;
  • requests a beneficiary’s statement if debt or obligation is to be taken over by the buyer;
  • complies with lender’s requirements, specified in the escrow agreement;
  • receives purchase funds from the buyer;
  • prepares or secures the deed or other documents related to escrow;
  • prorates taxes, interest, insurance and rents according to instructions;
  • secures releases of all contingencies or other conditions as imposed on any particular escrow;
  • records deeds and any other documents as instructed;
  • requests issuance of the title insurance policy;
  • closes escrow when all the instructions of buyer and seller have been carried out;
  • disburses funds as authorized by instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs;
  • prepares final statements for the parties accounting for the disposition of all funds deposited in escrow (these are useful in the preparation of tax returns).

THE ESCROW HOLDER DOES NOT:

  • offer legal advice;
  • negotiate the transaction;
  • offer investment advice.

Your local title company should be happy to provide additional information.

Article by CLTA

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BUDDY HARPER TEAM REALTY
5130 Wilkinson Blvd.,
Gastonia, NC 28056
Licensed NC & SC
Phone: 704-879-7155  

Fax:      704-879-7157
Email:bharper1@carolina.rr.com
Direct:  704-747-4016

Testimonials Page

Christyn is the best! She knows her stuff backwards and forwards, is the nicest person you will ever meet, and she will fight to get you the best in any situation. We have worked with her twice and my extended family has relied on her many times over the past few years and we have never been disappointed!  Emily 2-27-19
 
Stacey and I had a wonderful home buying experience working with Christyn Denton. Her knowledge of the Belmont area; her understanding of our home wants, needs and desires; and her professionalism were excellent. We had to find something in a short period of time, and she helped to take away our stress during the process. We highly recommend Christyn for your home buying needs. Sincerely, Mike & Stacey Andrea
Christyn, "I just wanted to take a minute and thank you for all the hard work and effort you put forth in our recently ratified contract. Your professional manner and commitment undoubtedly contributed to the successful conclusion to you or clients offer. If more agents were of your caliber our business would be so much more enjoyable." Tim B
Buddy, We want to thank you for the Excellent service you gave to us in finding our "Dream Home"! We appreciate all the time you spent in negoiations and getting us the best price on the house! Our best regards, Mike & Karen Worrell
Buddy, Thank you for helping us to sell the Stanley house, we really appreciate your hard work and friendship. Jeff & Emily
Buddy, We want to thank you for all your hard work that you did in finding a house for us! We cannot tell you how much we appreciate all the time and effort you put into us! We miss you already. Chan & Natalie
Buddy, I can't tell you how appreciative I am of all you did to help me. I must say, you have made me change my mind about realtors and their integrity. I certainly am convinced of yours! So thanks for all you do and for who you are. May God bless you! M. Hayes
Buddy Thank you so much for all your hard work to help us buy our first house! We really appreciate you going above and beyond for us. Thanks again! Ryan & Lisa
Buddy, thank you so much for all of your help in the past several months! You have been a God send, and we couldn't have done it without you! Thank you again, The Devers
Dear Buddy, Not everyone can do what you do. But anyone can see that what you do makes a wonderful difference. Thank you for your involvement and commitment in finding our home. The Green's
I appreciate everything you did for me. I feel like you went above and beyond and I'll never forget it. Thank you! I love my new home, it's perfect. Thank you again for everything! Sincerely, C. Phipps
We would like to thank Buddy Harper for all the time he took with us while we looked at condos all over town. He's like the Energizer bunny, he never runs out of power. He listed our house to sell on Thursday and we had a contract on Saturday. If you are even thinking of selling or buying you need to call the Buddy Harper Team Realty for results! Jimmy and Sandy Carr
Thanks for all your help in making our "dream home" a reality. We really appreciated that you went the extra mile to get us the best price for our home. You are truly a professional. Grant & Tammy Field
In all our dealings with Realtors over the past eight years, we have never met anyone as helpful and energetic as you have been. Without hesitation, we would highly recommend your service to anyone who is looking for an experienced Realtor who cares about getting things done and doing them right! Thanks for taking such good care of us, we couldn't have done it without you! Tisha Jackson
Thank you so much for taking the extra effort to make our first home purchase successful. You were there guiding us through all the crucial and important steps! You really listened to what we wanted in our home and you found exactly what we were looking for - at an amazing price! If we ever outgrow this home, we'll definitely be calling you! Ben and Catherine Hoersch
You made buying a home so easy for my wife and I. We were grateful for how much patience you used in answering all of our questions and taking us to look at so many houses. You never pushed us into looking at something we were not interested in. We strongly recommend you to anyone looking at buying a new home. Matt & Jennifer Keepes
Thank you so much for all you have done for us to make this so easy and stress free. Also, thanks for taking care of all the additional things that had to be done. Looking forward to seeing you soon. Tom & Carol
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