WHAT IS ESCROW?
WHAT DOES AN ESCROW COMPANY DO?
Most commonly, escrow companies are used when a seller and buyer sell/buy real property using a seller financing instrument (Real Estate Contract, Mortgage or Deed of Trust). The escrow company is the neutral third-party that accepts the buyer’s payments and disburses those payments according to instructions from the seller and buyer. That involves disbursements to sellers, underlying mortgage holders, the county assessor for property taxes, insurance companies for property/liability insurance, homeowner or condominium-owner associations for fees and/or other third-parties. In the event properties are sold on real estate contracts, the escrow company also holds the deeds executed by the buyer and seller.
In short, an Escrow Company serves as an Independent third-party who will collect, track, and distribute the funds in the escrow account according to the agreement established by the parties to the contract.
SEE FLOWCHART BELOW
WHAT DO WE ESCROW?
We escrow Real Estate Contracts, Mortgages, Deeds of Trust, Promissory Notes, and Residential or Commercial Rental Agreements.
WHY ESCROW?
For Sellers/Landlord/Creditors
-
To assure payments made per the contract are being properly applied. In the case of seller financing, to assure proper application of payments to principal and interest and proper disbursement to underlying encumbrances, taxes, insurance, etc.
-
To assure an accurate accounting of payor’s payment history and balance are quickly ascertainable at any point in time;
-
To maintain and provide necessary records for tax purposes.
For Sellers/Creditors Specifically
-
To provide options to easily and timely receive payments due: by check or automatic deposit;
-
To provide assistance in the event payments are not timely received from buyer.
For Buyers/Debtors Specifically
-
To make the payment process easier with multiple options available: payment by mail, or payment-by-phone or on-line using a bank account;.
-
In the case of seller financing, to report to the IRS on the buyer’s behalf the amount of interest paid each year.
BASIC ESCROW SERVICES FLOWCHART (RECs)
