Facts You Should Know About Escrow
An escrow is generally defined as a sum of money that is held by a third party or in an account which is deposited by a buyer and which shall be paid to the seller upon completion of the terms of the escrow.
The terms of the escrow are conditions upon fulfillment of which, the seller or recipient of the funds becomes eligible to ask for the payment and if the terms are met then the escrow company or account releases the fund without the need of any confirmation from the buyer. An escrow company or an escrow account is thus considered to be a third party that acts as the interim guarantor of payment in any transaction.
Escrow is used in various industries. It is used in real estate, by businesses to pay the companies they hire for a certain service and often it is also used by employers to pay employees that are not directly on the company payroll. Escrow offers the desired security and makes the entire process of payment efficiently convenient. But most important of all, an escrow offers the assurance to the buyer and the seller that all conditions of the agreement they mutually put up would be met prior to any payment being made or funds being released.
Normally, escrow becomes a crucial element in real estate transactions. This is simply because the funds are substantial, there are many parties involved and there may or may not be any level of familiarity between two parties. In such a scenario, it is very important that the buyer and the seller decide to operate an escrow that is completely nonpartisan. In many cases, real estate companies or brokers advise the property owner or the property buyer as to which escrow company they should be dealing with. In reality, one should make an independent choice. Knowing for certain that the escrow company is not favoring any side is necessary for the buyer or the seller, and both.
Operating an escrow would typically involve giving out a lot of information. The buyer must provide details such as credit history and all financial details that are necessary including personal information and identity proofs. The seller must offer a transparent record of the property including details about liens if any and all matters related to the title and taxes. An escrow operates best when both or all parties offer accurate details and are prompt in corresponding with the escrow officer.