Escrow / Settlement Overview
broad duties of an Escrow Officer or Closing Agent
Although the purpose for which an escrow is opened will influence the steps involved, in a classic escrow transaction - there are, broadly speaking, six phases an escrow moves through to be considered successful. They are:
- Record instructions from all the parties to a transaction.
- Gather such information, "consideration," and "performance" together as is necessary to fulfill the instructions recorded.
- Vouch for the validity of each party's claims and performance.
- Execute such recordings as are legally mandated by law, and the instructions, to establish fulfillment.
- Remit consideration and convey title to all entitled parties.
- Record the transaction and declare it closed.
Of course, each of these phases contains a number of steps and actions that must be performed in order to achieve the objectives of a particular escrow.
Since escrow is most widely used in the transfer of real property title between buyer and seller, we will delve into the escrow process as commonly employed by buyers and sellers of real estate. Be aware, however, that many other types of escrows exist. Another commonly used escrow is the Mortgage Payment Escrow, in which portions of payments received are accumulated to pay for property taxes, insurance, association fees, and in some cases - even maintenance.