1. What does an Escrow company do? How does escrow
benefit the buyer and seller? Be specific.
Escrow is a process whereby a neutral third-party act as
the closing agent for the buyer and seller. The escrow
company assumes the responsibility of handling all the
paperwork and disrobement of funds to close out the real
estate transaction.
The escrow process keeps all parties involved in mutual
agreement as upon receipt of instructions from all parties
(buyer, seller, lender, and real estate agent), the escrow
instructions are compared to determine whether the
parties are in mutual agreement. An escrow office is not
allowed to do anything outside of the instructions
dictated. When parties are in agreement and all
instruments and monies have been deposited, the escrow
offices makes sure the title is transferred.
2. What are the legal requirements for a valid escrow? Who
decides which escrow company to use? Who pays for
escrow?
The legal requirements of a Valid Escrow are
-There must be a binding contract between the seller and
buyer
-There must be the conditional delivery of transfer
instruments and monies to a neutral third party.
The selection of the escrow company is negotiated
between the buyer and seller. The payment of the escrow
fee is also negotiable between buyer and seller. The
decision for who pays the fee varies throughout the state.
In some areas, the seller pays, in other areas the buyer
usually pays, and in some areas the fee is split between
them.
3. What do title insurance companies insure against? What
is a preliminary title report? Be specific.
Title insurance insures against any errors, omissions, and
incorrect judgements that abstractors might make about
specific parcels of land.
A title insurance company insures the ownership of land
and the priority of a lien subject to the encumbrances
revealed in the title examination, the owner is assured
