WHAT IS ESCROW.
Buying or selling a home is the largest monetary transaction most of us experience in our personal lives. Buying or selling a home or land usually involves the transfer of a large sum of money. As a buyer or a seller, you want to make sure that all the conditions of sale have been met before property and money exchange hands. Through the years, custom has dictated that money and all related documents be transferred through a neutral third party. This process is called escrow.
In Arizona, escrows are processed by Escrow Officers, Most of these are employed by Title Companies. Escrow Officers are people who have years of hands-on experience in handling all the types of documents and large sums of money involved in transferring real property.
The escrow Officer serves as the neutral "stake holder" and the communication link to all parties in the transaction. The Escrow Officer holds all documents and money until all conditions of the sale are completed, at which time he/she will impartially carry out the written instructions given by the principals in the transaction.
HOW IS A RESALE ESCROW OPENED?
An escrow is opened by one of the real estate agents involved in the transaction. In some areas, it is traditional for the "listing" agent (the real estate agent who has the property listed for sale) to open the order. In other areas, it is the agent representing the buyer who will open the order. Your real estate agent can give you guidance in this area.
Today, many buyers and sellers are very knowledgeable about the process and both may have a favorite escrow officer and title company they wish to use. However, any question about "which title company" is always worked out before we get involved!
When and "order" (or "file") is opened, the agent will call the selected escrow officer. An "escrow number" is used to identify this transaction throughout the escrow (and, once the file is closed, on into the storage system used to safeguard these files). When the order is opened, the real estate agent provides us all the information about the property (address, current owner, prospective buyer, buyer's lender, outstanding loan information, sales price, etc.). The agent will also send in instructions which outline the details of the transaction, such as commission to be paid to the agent and expected closing date.
The next step is to verify all the pertinent information with the buyer's agent. The escrow officer will find out if a home warranty will be taken on the new home, when to expect the termite report to be completed and other details which will affect the escrow. The escrow officer will also make sure that everyone involved in the transaction has our phone and FAX numbers as well as the escrow number.
HOW IS A RESALE ESCROW CLOSED?
When an escrow file is opened, the escrow officer actually makes a list of all the items necessary to close the escrow. These may include the buyer's deposit, loan documents, fire and other insurance policies, home warranty, termite report, terms of the sale and any seller-assisted financing, title insurance policy and requests for payment for various services to be paid out of escrow finds. Because most people have rent or lease payments month-to-month, escrows often close at the end of the month so the buyer can move into their new home and avoid paying another month's rent on the previous residence.
The Escrow Officer cannot disburse any funds or information unless he/she is instructed to do so in writing. So, when the necessary documents and money have been received into the file, and all conditions of the Purchase Contract/Escrow Instructions have been complied with, the Escrow Officer will proceed to "close" the escrow, i.e. record the final transfer documents then disburse all funds held to the entitled parties.
