First, a little about "escrow". To finalize the sale of a property, a neutral, third party (the escrow company) is employed to assure the transaction will close appropriately and on time. A house is said to be in escrow when in the closing transaction, money is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. For example, in an online transaction, PayPal is the secure third party that obtains the buyer's funds, and then sends the payment to the seller.
Settling the last details like obtaining funds, finishing forms, getting the documents for loans and liens, and making sure you get a spotless title to the property in preparation of your purchase gets finalized are all part of the job of the escrow company.
Escrow companies collect the following legal documents:
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
Closing on the house takes place when the steps of the escrow are finished. All expenses like title insurance, inspections and real estate commissions are paid. The house's title gets transferred to you and title insurance is issued per the policies of your individual escrow agreement.
When closing is done, you'll submit a payment to the escrow agent. As your agent, I'll let you know what is an acceptable way of paying.