First, a little about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is used to assure your home closes on time and the transaction goes smoothly. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an Internet transaction, PayPal is the secure third party that obtains the buyer's payment, and then sends the funds to the seller.
The escrow agent makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are reached prior to the sale being completed. This includes getting payments and certificates, finishing required forms, and obtaining the release documents for any loans or liens that have been paid with the transaction, assuring you have a clean title to your place before the negotiated price is fully paid.
The pieces of paperwork the escrow holder may secure include:
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
Upon finishing of all portions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. You'll then secure the title to the property and the title insurance gets dispersed as agreed upon in the escrow instructions.
At the close of escrow, payments are submitted in an acceptable form to the escrow. As your real estate professional, I'll let you know what is an acceptable form of payment.