What Is Escrow When Buying a Home?

Buying or selling a home is an intimidating process, which relies on a network of professionals to navigate safely. Among those professionals is the escrow officer.

Neutral Third Party

Escrow acts as a neutral third party between the buyer and the seller, taking funds and holding documents in trust for both parties.

Stakeholder

As part of being a neutral third party, escrow officers act as stakeholder for all buyer funds (down payment, bank loan). The officers funds until the seller has complied with terms of the sales/purchase agreements.

Handle Home Title

Buyers need assurances that they are engaging in a legal transaction. The escrow officer confirms the seller actually owns the property being sold and that the seller has the right to sell. Escrow also checks for liens on the property which need to be paid off before the sale is final.

Legal Documents

Buying a home is a legal transaction. The escrow officer prepares legal conveyance documents and, upon completion of the contract, records the deed conveying the property to the buyer.

Completes the Sale

Escrow officers finalize the transactions by clearing the home's title, recording the new deed, paying off all liens and encumbrances and handing the final check to the seller.