In real estate transactions, escrow refers to an account that acts as the safekeeping of monetary items by a neutral party. Two parties, an issuer and receiver, use an escrow service to keep money, property deeds, securities, bonds, or other types of assets until the transaction is safely completed.

The neutral party is known as an escrow agent or officer. An escrow agent can either be an individual, like an attorney, or an institution, like a bank. While this may sound like a trustee, it is actually quite different since an escrow agent is neutral and works for both the issuer and the receiver.




A home is said to be “in escrow” after the seller accepts your offer and until the sale is completed. Escrow is a process during which a trusted, neutral party — usually a real estate title company, an attorney or an escrow agent — holds your earnest money deposit, the seller’s deed and other paperwork until all conditions are satisfied at closing. Meantime, the lender processes the mortgage application, the title search takes place and you hire an inspector, buy homeowners insurance and prepare to move.


If you get a mortgage to buy the home, the lender might establish an escrow account to collect money each month to cover your annual property taxes and insurance bills, and then pay them on your behalf when they come due.

An escrow account is an account designed to safely hold funds temporarily. The escrow provider should be a completely neutral third party with no preference about who ultimately receives funds from the account. For example, in a real estate transaction, the escrow account does not belong to the buyer or seller.



A real estate sales escrow accounts are most commonly just referred to as “escrows” by Realtors. This type of escrow account is where your earnest money (and sometimes your down payment) will be held until you close on your new home. An escrow account gives the real estate company the confidence that you will follow through with your agreements and not be tempted to use that down payment money to pay for unexpected expenses prior to closing. This money can be refunded if there is something seriously wrong with your home or the seller does not hold up their end of the deal, the terms of your escrow are spelled out in your real estate contract.



A mortgage escrow account is actually designed to make your life easier by giving you a way to pay your homeowner’s association fees, property taxes, mortgage insurance and homeowner’s insurance monthly, instead of all at once. There are very strict rules on how much money must be in the account at all time, both minimum and maximums, to protect borrowers and lenders alike.



A construction escrow account is something that most homeowners will never encounter — they’re used strictly by construction professionals in conjunction with their construction loans. Both homes under construction and those being extensively remodeled are eligible for these types of loans. With these accounts, the contractor basically agrees that they will complete their project in a number of steps and provide an estimate for the amount of funding they will need for each part of the process. The bank then releases these funds as each step is completed to a third party company (often a title company) who holds them in escrow. The contractor can request these funds using construction draws, but he has to support his money requests with receipts.



Most people get their first exposure to escrow when buying or selling property. When you put an offer on a home, you usually include a check with 1-2% of the offer price to ensure the seller that you serious about wanting the home. This is called an earnest money deposit. Once you make an offer, and the offer is accepted, this earnest money deposit is cashed and placed into an escrow account, where it is held while the home is under contract.

The seller will receive the earnest money deposit from the escrow account if the buyer backs out of the contract for reasons that are not approved by the contract. The buyer will receive the earnest money deposit if the seller backs out of the contract for unapproved reasons or if they find something wrong with the home under the home inspection or disclosures and are uninterested in continuing with purchasing the house.



When choosing an escrow company there can be many important factors to evaluate. Fees, location, staff and even recommendations from friends and colleagues are all things to consider. With Citrus Heritage Escrow by your side, you can rest assured that when you receive your settlement check, you have gained the maximum benefit from your home sale or purchase.

Call us today with any questions or concerns. Our professional Escrow Agents will help you through this exciting yet confusing process. (951) 335-7200