10 Facts About Escrow
1. Not every state has the same laws and requirements for escrow. Some states only allow attorneys to handle escrow while others only require a licensed company or agent.
2. Many title companies operate under different requirements set by the Department of Insurance than individual agents or small escrow companies. Especially when these are large businesses that operate across many states. Be sure to check your state and local laws regarding escrow professionals.
3. Most escrow forms will have to be notarized. There are some exceptions but notarizing documents is a good rule of thumb. Your escrow professional should be able to identify which documents will require notarization.
4. Escrow instructions should specify in writing how and under what conditions money will be disbursed, especially if the escrow doesn’t close and the property’s sale falls through. Money generally cannot be distributed unless there are written instructions
5. If no agreement can be reached about how to distribute the money leftover after a failed sale and the escrow date has passed, the escrow agent may file an interpleader. This is a document which names all the parties that might have an interest in the money and asks a court to decide how to disburse the money. Otherwise, an escrow agent may be obligated to keep funds indefinitely
6. Whether you are buying or selling, insurance is a must. Home owners’ and title insurance are important. The escrow process is complicated and puts a lot of money on the line. Talk to your real estate agent about your insurance needs.
7. Complete all contingencies, inspections, and walkthroughs as early as possible. This includes building inspection, pest control, and clearing all liens on the property. Any delays can hold up the escrow process
8. Did you know that the word “Escrow” comes from the old French word “escroe,” meaning a scrap or a roll of parchment? That’s pretty appropriate considering the terms of holding funds in escrow would be documented in writing.
9. Referral discounts are illegal in the escrow business. If an escrow agent offers commission to real estate agents or lenders for referring clients to them, they are breaking the law.
10. An escrow agent, lender, or real estate agent cannot provide you with any legal advice whatsoever. The escrow process should go smoothly but if there are potential complications like inheritance or a large number of liens on the property, it is advisable to seek a lawyer who specializes in escrow or property law.