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Home Listing Tips

Presenting Your Home

Who’s Who


What is Escrow?

Home Warranty


Title Insurance

Who Pays What?

Escrow is the depositing of funds and documents that establish the terms and conditions for the transfer of property ownership with an impartial third party for delivery upon completion of the terms of the escrow instruction

You’ve probably heard the term: documents are held “in escrow” or that the parties have “opened escrow.” The principals of the escrow (Seller, Buyer, Lender) will give to the escrow holder written instructions setting out the terms and conditions under which the further delivery is to be made. The Escrow Officer holds responsibility for seeing that these terms are adhered to.



The selection of escrow is typically done by agreement between the principals. In most areas of the country, the Seller typically makes the selection but it does vary. Often times, this aspect of a transaction is directed towards the Seller’s preference because if a home has fallen out of escrow prior, disclosures and reports are already ordered and paid for with an escrow company so it makes sense based on cost and efficiency to stay with the same company. Real estate agents or Lenders often recommend an escrow holder but it is the right of the Seller and Buyer to select the company they deem to be most competent and experienced.



The common use of an escrow is to enable the parties in a real estate transaction to deal with each other with less risk, since the escrow holder acts as:

  • Custodian for funds and documents.
  • A clearinghouse for payment of all demands.
  • An agency to perform the clerical details for the settlement of the accounts between the parties.

An escrow begins with the Realtor® opening the order for title work’ and providing the Purchase Agreement and all executed documentation to escrow. Once received, Title prepares a preliminary report. Upon receipt of the preliminary report, an analysis is made to determine the necessary action and documents required to complete the transaction:

  • Demands for the satisfaction of liens not acceptable to Buyer and/or Lender.
  • Documents for recording.
  • Instructions and requirements of the new Lender.

In most areas, Buyer and Seller instructions are prepared for signature from the information gathered. When all the title and financial requirements are met, and instructions from all parties can be fully complied with, the escrow is said to be ‘in perfection’ and can close. Once the financial settlement takes place, documents are recorded and the title insurance policies are then issued.