In a real estate purchase (when you are the buyer), escrow opens when you and the seller sign a sales contract (also commonly known as a real estate purchase agreement). The signed sales contract, plus any additional instructions necessary to complete the transaction, serve as the instructions for the escrow officer.
As your escrow officer, we assure that your lender will release the loan funds to the seller at the same time that the deed is recorded to reflect your new ownership. We are a neutral third party where all funds, documents and instructions necessary to complete the transaction can be deposited.
The Role of Escrow in a Real Estate Purchase
The role of escrow in the sale or purchase of a home is to ensure the following steps and requirements are met by all parties involved in the real estate contract:
Both the buyer and seller complete all forms and instructions necessary to complete the transaction.
- The buyer deposits funds sufficient to meet the total sales price plus costs.
- The seller deposits a deed to the property in favor of the buyer.
- The seller furnishes all required disclosure reports.
- The new lender deposits loan proceeds.
Once all conditions of the escrow have been met, the deed is recorded to transfer the ownership interest in the property to the buyer, and net proceeds are paid to the sellers.