What is Escrow?
Escrow is when two parties arrange to have an impartial third party escrow provider hold money, paperwork, and other assets on each party’s behalf until areal estate transaction has been finalized.
Understanding the escrow process helps you minimize any risks, so you can move forward with your real estate transaction comfortably.
The Escrow Process
Buyers and sellers agree to certain terms. A seller must pay the agreed upon amount and the seller must provide the agreed upon item. Buyers reserve the right to have a property inspected before they pay the purchase price. Sellers want every assurance they will be paid at the closing. A third-party escrow service ensures each party meets their end of the bargain and complete what they agreed upon.
The Responsibilities of an Escrow Provider
An escrow provider’s most important role is safeguarding the assets of both the buyer and seller until the funds are transferred from one party to the other and the transaction is complete. An escrow provider receives assets from the buyer and disburses these funds according to the terms of the escrow and closing agreements. Real Estate Escrow
While escrow can be used in various financial and legal situations where something of value is bought and sold, escrow is most commonly used in real estate. The escrow process begins when a signed agreement is delivered to an escrow agent. The escrow agent ensures all of the terms of the contract are satisfied by verifying home inspections and disclosures are completed. The escrow process is complete when the seller receives the purchase money and the title is recorded with the buyer’s name.
A third party holds all assets in an escrow account to pay homeowner’s insurance and property tax payments on a home. Homeowner’s insurance companies will accept monthly payments to ensure they receive the funds through the escrow account if the buyer would not be able to make them, otherwise.
A lender would be at risk if the insurance policy was not being paid. Without an active insurance policy, if something happens to a home, it could decrease its value. If property taxes are not paid., a lien could be put on the home and the lender would only be able to collect what’s left after the taxes are paid. Lenders often require escrow accounts to help ensure these expenses get paid on time.
Your lender sets up the escrow account, depositing the money into a separate escrow account. Each year, you lender pays those bills from the escrow account.
If your lender doesn’t set up an escrow account or require an escrow account, it will benefit you to request an escrow account to help you budget for these expenses.
Florida National Title Services
Florida National Title Services works alongside Richard S. Weinstein, an experienced real estate attorney to ensure the title of the home you desire is clear. Both recommend and can assist with title insurance policies. Florida National Title wishes you a happy and healthy holiday season.
Florida National Title Services provides expert title services. When you are renting, we can help with every step of the way. Florida National Title has years of experience guiding Florida homebuyers through the real estate purchase and refinance experience and have helped them solve the problems that come up in the process. We will decipher the “legalese” and explain what we need and why we need it each step of the way. The blogs to follow will address specific issues to guide buyers to understand the process better and to help them avoid many of the pitfalls. Call us at (561) 408-0729 or visit our website.
Florida National Title Services, LLC
250 S. Central Blvd., Suite 101
Jupiter, Florida 33458
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