Escrow Agreements & Instructions for Property Sales - Escrow

How to Use Escrow to Sell Property Escrow Instructions

Escrow is a legally recognized process in which one party to a contract delivers money or documents to a third person to be held by that third person until the fulfillment of a stipulated condition in the contract. The assets handed over in trust are known as escrow property. The primary parties to an escrow transaction are the grantor and the grantee. The third person with whom the money or documents are kept is known as depositary or escrow agent.

An escrow agent is a person who acts as a middleman for transactions between two or more parties and helps to buy or sell property. An escrow agent works for a remuneration generally known as escrow fees. An escrow agent may be an individual or a business. An escrow agent helps both buyers and sellers in securing a home or other property and in examining documents. The obligation of an escrow agent is that of an impartial third party to a transaction. Services of an escrow agent can also be used when buying other real estate property or personal property, such as buying a car online.

Escrow closes when all stipulations of a real estate contract are met. Before closing of an escrow account, an escrow agent is the agent of both parties and the escrow agent is a fiduciary. Organizations like the American Escrow Association (AEA) work in the national legislative and regulatory arenas on behalf of real estate settlement agents.

In the context of real estate mortgages, an escrow is a separate account different from the main mortgage loan account. While lending money to a homebuyer, mortgagers insist buyers establish an escrow account and pay into it monthly an amount along with their mortgage payment. In an escrow account, money is deposited for payment of some provisions that apply to the mortgage, typically property taxes and insurance.

In real estate transactions, parties may enter into a title insurance contract with a title company. A title insurance contract is an agreement to indemnify damage or loss resulting from defects in title of the real property. Title and escrow services provided by a title insurance company include setting up an escrow account so that parties to a contract receive what is stipulated. Sometimes, in real estate transactions an escrow agent acts as a title company. As a title company, an escrow agent will hold the property title in escrow according to the escrow instructions until all of the terms of the contract between a seller and a buyer are met.