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What Does Each Party Do in the Escrow Process?

Although every escrow transaction is unique, the following summary details the typical responsibilities of each party to the escrow transaction:

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seller

THE SELLER

  • Deposits the executed deed to the buyer with the escrow holder.

  • Deposits evidence of pest inspection and any required repair work.

  • Deposits other required documents such as tax receipts, addresses of mortgage holders, insurance policies, equipment warranties or home warranty contracts, etc.

THE BUYER

  • Deposits the funds required, in addition to any borrowed funds, to pay the purchase price with the escrow holder.

  • Deposits funds sufficient for home and title insurance.

  • Arranges for any borrowed funds to be delivered to the escrow holder.

  • Deposits any deed of trust or mortgages necessary to secure loans.

  • Approves any inspection reports, title insurance commitments, etc. called for by the purchase and sale agreements.

  • Fulfills any other conditions specified in the escrow instructions.

buyer / borrower
loan agent / company

THE LENDER (if applicable)

  • Deposits proceed of the loan to the purchaser.

  • Directs the escrow holder on the conditions under which the loan funds may be used.

THE ESCROW HOLDER

  • Serve as the neutral agent and the liaison between all parties involved.

  • Prepare the escrow instructions.

  • Request a Preliminary Title Search to determine the status of title to the property.

  • Comply with the lender’s requirements as specified on its instructions to escrow.

  • Receive and handle purchase funds from the buyer.

  • Prepare or secure the deed and documents related to the escrow.

  • Prorate taxes, interest, insurance and rents.

  • Secure releases of all contingencies or other conditions imposed on the escrow.

  • Record the deed and any other documents.

  • Request the title insurance policy.

  • Close the escrow pursuant to instructions supplied by the seller, buyer, and lender, if any.

  • Disburse funds as authorized by the instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs.

  • Prepare final statements for all parties involved that account for the disposition of all funds held in the escrow account.

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LIFE OF AN ESCROW

life of an escrow
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