HarryTheSpider

Hi All,

We're buying a new-build house.

I'm curious about what the function of an escrow agency is, in practice.

I'm looking for a plain-English description - what they do in reality, what they cover, what other parties they might typically deal with etc.

Cheers

Harold Spider Esq.

Steerpike

They make sure everyone gets paid what they are owed, at the right time, and in the right sequence, and that you get your keys when appropriate.

Since big sums of money are involved, and there's lots of scope for fraud and error, they are supposed to be an independent 3rd party making sure it all happens correctly.

Purchases can often get complicated, with the money for the purchase coming from multiple sources - you are transferring money from your bank, the lender is kicking in money, and you may (as an example) be borrowing money from parents/relatives/etc. Money is also going to multiple sources - insurance companies, sellers, etc. The money to the seller may need to go to multiple destinations also - some goes to the actual seller, but most of it may go to the seller's lender and possibly a '2nd' or '3rd' mortgage holder.

Hopefully as a new home buyer things are not too complicated.

FYI, new home sellers (builders) are not as willing to negotiate on price as regular homeowners (they want to hold the 'average' up to justify pricing for other buyers, and for future appraisals) but will negotiate like crazy on upgrades and options and discounts ...

Michael

Like any transaction, a title/escrow company is just a neutal party that records deeds, holds back money, transfers money, performs title searches, offers title insurance, etc..

Usually state laws offer more protection to the homeowner when purchasing from a new home development than private party transactions restricting what can be in a contract since the developer is drawing up the contract.

RoadWarriorFromLP

The escrow just serves as a go-between for the money and related items.

In practice, the escrow goes hand in hand with the title work. The title work ultimately takes the form of title insurance, which protects the buyer, and the lender's title policy, which protects the buyer's lender. The primary protection provided by the insurance is for lien coverage, but it also includes identifying the boundaries of the property. For a residence, this should be fairly simple, since the boundaries are probably not an issue and survey shouldn't be required.

As you may have guessed, this process and the tradition of who pays for what can vary by state. This might help: http://www.escrowhelp.com/escrow_pro..._by_state.html

sir_eccles

The title/escrow agency essentially fulfills the role of the Uk conveyancing solicitor for the most part though a realtor also picks up some of that role.

Don't confuse it with the escrow account that the lender may require to hold property tax and insurance funds.

Yorkieabroad

As has been said, they basically make sure that the pot of money is filled properly, then disbursed properly to the parties involved in the transaction.

Thats the theory, but one title/escrow company in Houston has just gone on my ever extending list of thieving incompetent scumbags...

We are selling an apartment. I signed all the closing docs at 9.30 yesterday morning. Buyer was scheduled to close at 2.00pm.
At 3.00 pm they confirmed that the sale had been funded (ie cash in the title companies account) and handed the keys over. At 4.15 we got an email (no phone call) saying that we had missed signing a document extending the time to close from 5/30 (as original contract) to 5/31. I'm not sure what practical purpose that actually serves, as all parties concerned had completed everything else, including payment, so plainly the extension was not a problem. Unfortunately they didn't call us to tell us about the email, so we didn't pick it up until about 4.40, and signed and returned it straight away. Title company took our "delay" as an excuse not to remit the funds for the sale to us as "we" missed their 4.30 deadline for wire transfers. Total and utter bstards....

OK, we should get the funds first thing Monday, but in the meantime through their lack of organization, they are holding my money over the weekend, and I am wondering all weekend whether I am actually going to see it on Monday or not....

I'm sure (99%) that all will be OK in the end, but that 1% is really pi$$ing me off....

Duncan Roberts

At a very, very basic level, they are the Pay Pal of house buying.

Tarkak9

They are a designated intermediary neutral entity who are responsible for preparing the HUD settlement sheet, coordinate and disperse funds (inc payoff) and execute any/all escrow instructions; thus coordinate closing. Depending on your state, they may be responsible for preparing the deed, but in many areas that is prepped by an attorney. Title companies often can and do serve as an escrow company as an extension of service beyond providing title insurance.

Discuss with relevant professional counsel - consider that the Escrow company to designate time and place of closing in a contract to avoid a quagmire or default situation between 2 contract parties (to say seller or buyer to determinate time and place can infact set up an argumentative situation b/c what if such t&p isn't agreeable to either party)

Who will they be interacting with? - You, Seller, RE agents, attorneys, buyer's Lender, Seller's bank (payoff) the HOA, likely the assessor office, clerk & recorders' office (so docs are recorded), water company (often water bill is a lien-able bill), FedEx/UPS - and maybe someone who tries to sell breakfast burritos in the morning....

New construction .... double check what the prop taxes may be; also check with HOA what the working capital and xfr fees are ahead of time... you don't want any last minute surprises. Everything is negotiable - who pays for what is between seller and buyer.

Tarkak9

- Did the pay-off go out on Friday or are you referring to your proceeds not being wired to you until Monday??

Ray

lets play ..." Spot the Realtor"

Bob

Not really anything wrong with that as he's not plugging a service or randomly spamming random threads.

RICH

I wonder about regional terminology. I am in Fl and my job involves shunting money around nationwide for RE transactions. We refer to Closing agents, I hardly ever hear of Escrow agents, although Escrow is one of the things the former do.

In literal terms, Escrow is a third party holding account for monies, subject to contractual obligations being met.

paddingtongreen

In plain English the escrow is the money or item of value that is held pending the completion of a contract. It is usually held by an independent third party like the title insurer.

It is also, sometimes, used instead of "security deposit" on an apartment lease.

md95065

In my experience in California escrow is normally handled by a Title Company - ie the people that do the title searches and provide title insurance will also handle the escrow and closing of the deal. So, yes, they are acting as an "escrow agent" among several other things but that is not how they are normally described.

Ray

It was a joke ..sheesh