In the escrow, all parties involved give their written instructions to this neutral intermediary, the "escrow holder," whose duty it is to assure that no funds or property will change hands until all instructions have been carried to completion.

What types of transactions go through escrow?
Most contracts that involve the transfer or financing of real or personal property can be placed in escrow. You may be involved in escrow not only when you buy or sell a home, but also when you buy a mobile home, sell a business or transfer stock in a closely held business.

Why do I need escrow?
Whether you are the buyer or the seller, you want assurance that no funds or property will change hands until all of your instructions have been followed. With the increasing complexity of business, law and tax structures, it takes a trained professional to supervise the transaction.

Who handles the escrow transaction?
The escrow officer is a trained and experienced professional. He or she can provide you with the assistance required to close your transaction quickly and effectively. This professional person may, under the terms of the instructions, make the decision that the conditions of escrow have been met, and then order the transfer of the affected real or personal property to the interested parties.

As a seller entering into escrow, what must I do?
To be fully prepared when you enter the transaction, you should have sufficient information relative to your ownership available. This would include information concerning any loans, taxes, insurance and, if appropriate, rental data. Items which would be the sources of this information are your original deed or title policy, fire insurance policy and a year-end statement from the existing lender.

As a buyer entering into escrow, what must I do?
If the transaction is contingent upon a new loan, it is your responsibility to arrange this loan. Your real estate agent can be most helpful in obtaining a lender, since he or she is more knowledgeable about which lenders are currently active and their financing terms.

The instructions are ready--now what?
When the escrow instructions have been prepared, read them carefully to determine that they are complete and properly reflect your total agreement. If you have any questions or corrections, discuss them with the escrow holder before signing. Once the instructions have been signed, they become the basis for the conduct of the escrow.

If I still have questions about the transaction, where can I go for answers?
If negotiations have been conducted through a real estate agent, that person, or his/her broker, should be your primary consultant.

The role as an independent agent prohibits the escrow officer from answering many of your questions. However, a knowledgeable escrow officer, whose responsibility is giving impartial service to all the parties, will refer you to the proper source for your answers. An escrow officer will often suggest that the customer seek the advice of legal counsel or a tax consultant.

What happens at the closing?
When instructions of all parties to the escrow have been carried out, the closing can take place. All outstanding funds are collected at this time and all costs must be paid. Title to the property will then be transferred. All specified documents are recorded or filed at this time.

The closing is complete--now what?
Upon closing, review the closing statement to determine that the costs were allocated in accordance with your instructions.

It normally takes a period of time after closing before the hazard and title insurance policies can be delivered to you. Any recorded documents to which you are entitled will be mailed to you after the escrow has closed. Frequently these documents will come to you directly from the office of the recorder or the Secretary of State in the case of personal property filing.

What if the transaction isn't completed? Is my deposit refundable? Who pays the fees?
When a transaction fails to close, a cancellation agreement must be reached between the parties. This cancellation agreement must be put in the form of a written instruction, just as your contract was.

Since the deposit is part of the escrow contract, both the buyer and the seller must mutually agree to its disposition. Instructions for the disposition of this deposit should include, among other things, provisions for payment of charges incurred during the escrow. This would include fees and costs incurred by the escrow holder and charges such as loan processing and homeowner association demand fees as specified in the escrow instructions.