Escrow … What is it?
In Arizona, the escrow company is a neutral third party that ensures that the terms and conditions of the purchase contract are followed with respect to all parties involved in the transaction – not only the Seller and Buyer, but also the real estate agents, the lender for the Seller, the lender for the Buyer, homeowner associations, etc.
The disbursement of valuables (money, deeds, etc) is done after the recording of transaction documents with the County Recorder. Legally, the recording event is “closing”.
Usually, the title company that is to provide title insurance to the Buyer, and to the lender if there is one, provides the escrow services for the transaction.
The earnest money from the Buyer is deposited with the escrow company to “open escrow”, which is the first step in the closing process.
One of the first things the title company will do is provide the Buyer with a preliminary title report, indicating who the official current owner is, what loans and liens exist, and listing the conditions that must be fulfilled before any title insurance policy will be issued to the Buyer.
During the process of closing, the escrow company takes care of many items and issues – such as to payoff the mortgage of the Seller, to record the release of that mortgage, to record the new mortgage of the Buyer, to make certain all liens on the property, such as for taxes, are satisfied and cleared – just to name a few.
The escrow company does a very important job – and part of our job is to help them do theirs. TNT will review the preliminary title report and the settlement statement, and we check that loan documents are delivered to escrow in a timely manner.
This is another area that is both “art” and science – “art” in the sense of anticipating where the problems are likely to occur, then making a concerted effort to affect solutions in advance.
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