The Closing of Escrow and its Relevance to Real Estate
Many would be familiar with the term escrow commonly used in real estate terminology. It is essentially a third party that facilitates the sale and purchase of the property. One of its essential functions is to act as safety net for both the parties involved. The seller deposits its agreement with the escrow and the buyer makes the payment through the escrow. Only when the conditions of both the parties are satisfied, can the actual transfer of the title deed take place. In return for the service, the escrow earns a commission.
Once the buyer has completed the requisite payments, the escrow account can be closed. Since the terms of the escrow account is legally binding, the date for closing the deal is often stipulated. However, more often than not, parties default in their payment or the production of the paperwork. Such instances can lead to termination of the entire deal and financial losses for both the party.
Missing the Date of Escrow Closure
The reason for missing the date of escrow closure may be because of the buyer or the seller or both.
- A buyer normally should not be expected to default. However, there are times when financial hitches do not allow the payment to be completed on time. Such a scenario may be devastating for the buyer. The other party may refuse to return the amount already paid and claim compensation for damages.
- There are times when the seller fails to meet the requirements of the contract as well. Under such conditions, the buyer may decide to sue the seller and take legal action, at times forcing the seller to conduct the deal or pay some compensation.
- Sometimes, it may happen that both the sides involved are unable to meet the deadline. This may be solved by a mutual agreement between both the parties involved.