Buying a house is a complicated process that many people don’t understand or are just not prepared for. One of such complication I know as a San Francisco property management expert is the escrow process. Escrow can be defined as a deposit of funds, a deed or other instrument by one party for the delivery to another, upon the fulfillment of a given condition.
Investopedia defines the escrow as a financial instrument held by a third party on behalf of the other two parties in a transaction. This simply means that the money or the documents is not with the buyer or the seller but is under the safe custody of an escrow officer.
Why Escrow is Important to You
As a San Francisco property management expert, I can tell you that whether you are a seller, buyer, borrower or a lender, you need the assurance that no documents or funds will change hands until all the conditions in the transactions have been adequately fulfilled. The escrow holder has the obligation to safeguard the funds/documents while in his or her possession and release them only when all the relevant provisions of the escrow have been met.
The Escrow Process
The principal parties to the escrow; the seller and the buyer, initiates the escrow process by writing escrow instructions, which they sign and deliver to the escrow officer. In most cases, you will need a San Francisco property expert to provide the necessary information for the preparation of the escrow instructions and documents.
Documents that will be required by the escrow officer include fire and other insurance policies, requests for payment for various services to be paid out of escrow funds, title insurance policies, tax statements, terms of sale and any seller assisted financing, loan documents, etc.
It is the responsibility of the escrow officer to execute the escrow in accordance with escrow instructions. When all the conditions of the escrow can be achieved or met, the escrow is closed. As a San Francisco property management expert, I have learned that escrows may differ greatly in certain respects depending on the nature of your property and the transaction at hand.
The escrow holder must be able to handle the documents and funds according to the instructions, pay all the authorized bills, respond to authorized requests from principals and close the escrow when all the conditions have been fulfilled in accordance with the instructions. Escrow officers are also required to provide a full account of their transactions.
The selection of the escrow holder is usually done jointly with the agreement between the parties. If a San Francisco property management expert is involved, he/she may recommend an escrow holder. However, the right to select an escrow officer remains with the principals, who must ensure that they get a person they can trust.
My advice as a San Francisco property expert is that it’s always very important to read and understand all the escrow instructions. If there is anything you don’t understand, be sure to ask your escrow officer for explanations. However, your escrow officer/holder is not a lawyer. If you need a legal opinion, consult your lawyer to advise you accordingly. When your transaction is prepared to close you will be required to deliver funds (if required) to the escrow in the form requested by the escrow officer. Cash and or personal checks are not accepted by escrow. Typically funds are wired directly into escrow or possibly a cashier’s check is used. Do not hesitate at any point to contact your escrow officer to ask how you can help speed up things during closing.