Escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a particular condition or event.
In an Escrow arrangement, two or more parties agree that specified property is to be held by a third party, called the “escrow agent” or “escrow holder”, until certain conditions are satisfied.
What property may be held in escrow?
Various types of property may be held in escrow. Examples are money, securities, documents, merchandise, commodities, intellectual property, websites, powers of attorney, licenses, software, computer source code and insurance policies.
Why do I need an escrow?
Escrow is in the interest in all parties in a real estate transaction. Whether you are the buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed.
How does escrow work?
The principals to the escrow are the buyer, seller, lender, and borrower. Escrow instructions (usually in writing) are created, signed and delivered to the escrow officer. If a real estate broker is involved, she will usually give the escrow officer the necessary information to prepare the escrow instructions and documents.
The escrow officer processes the escrow, according to the escrow instructions. When all conditions required in the escrow can be met or achieved, the escrow is “closed”.
Each escrow, although following a similar pattern, will be different in some respects, as it deals with your specific property and the transaction.
What are the duties of an escrow holder?
An escrow holder’s duties include:
- safeguard the funds or documents or both while they are in its possession
- follow the instructions given by the principals and parties to the transaction in a timely manner
- handle the funds or documents or both according to the instructions
- pay all bills as authorized
- respond to authorized requests from the principals
- close the escrow disburse funds or convey title or both only when all provisions of the escrow have been complied with
- provide an accounting (the Closing or Settlement Statement).
Who chooses the escrow holder?
Usually the principals agree about who the escrow holder should be. A real estate broker, if involved in the transaction, may recommend an escrow holder. The principals would be wise to use an escrow holder who is competent and experienced in handling the particular type of escrow.
Where does the word “escrow” come from?
The word derives from the French word “escroue”. It means a scrap of paper or a roll of parchment. This refers to the deed that a third party held until a transaction was completed.
HLF is competent and experienced in handling various types of escrow. You will benefit from our impartiality and objectivity. HLF offers you individualized, conscientious and dedicated escrow services. We can act as an Escrow Agent for individuals or corporations who require an escrow arrangement. You can put your trust in us and rest assured that we will diligently carry out our duties.