Escrow is the placing of something with a neutral third party, an Escrow Agent, until conditions are met. In a real estate transaction, the contract and Earnest Money are placed with the Escrow Agent soon after the contract is executed. The contract delineates the conditions that must be met by each party, such as the payment of the purchase price or the delivery of a deed to the property, before the transaction can be completed. In some states, the Escrow Agent is separate from the title insurance company, but in Texas both functions are handled through the same office, and sometimes just referred to as a Title Company.
In the purchase or sale of a home, the Escrow Agent (Title Company) not only receives the contract and Earnest Money but, throughout the time the contract is pending, may receive lender documents and funds, a survey of the property, payoffs of any mortgages or other liens affecting the property, information from homeownerâ€™s associations affecting the property, verification of taxes for the property, home warranty and other invoices for services required by the contract, and information on the buyers and sellers in the contract that may have an impact on title to the property. Once all of the information required by the contract has been received by the Escrow Agent, they will prepare a Settlement Statement (which will be balanced with any lenderâ€™s Closing Disclosure) that details the final funds needed from the buyer and funds that the seller will receive after taking into consideration the charges and credits related to the transaction and called for by the contract.
Your Escrow Agent will do quite a bit of work while getting the contract to the point of closing, but they cannot do it alone. Receiving information and documentation from others requires those providing the information to act also. As your Escrow Agent, we do our best to communicate to the parties, lenders and vendors what we need and to provide items requested from us in a timely manner, and ask that others involved in transactions do the same. Communicating effectively and working together we can make your transaction a smooth and successful experience.