Page 12 May 24, 2018 EL SEGUNDO HERALD
What is “Escrow”?
Is it a process? A company? A person? The answer is a smidgen of all three. The word
“escrow” comes from the Old French escroue meaning “roll of parchment” or paper
representing the deed or asset a neutral third party would hold until the completion of a
transaction. In our modern and litigious times however, escrow can have an illusory nature,
and be vague and confusing for first-timers. Until you have been through the process,
you cannot fully wrap your head around and appreciate how escrow works and what to
anticipate. A successful escrow is the product of an experienced team of real estate, title,
and escrow professionals united in cause to guide you through this relatively timely, yet
very important process.
Trust the Process!
At its essence, escrow is a process. Escrow usually “opens” when a fully executed purchase
agreement has been delivered to a neutral third party, or escrow holding company.
The escrow holding company is chosen by mutual agreement between both parties of the
sale. You might see a duration of 5-60 days, depending on the complexity or necessity of
a buyer or seller’s situation. The duration, or escrow period, is also determined by mutual
agreement between the parties.
After escrow opens, the escrow holder will order a property title search with the title
company chosen by the parties in the contract, and prepare joint escrow instructions. These
instructions are reviewed and approved by the two parties involved in the transaction (with
help from their agents, of course!). Once agreed upon by both sides, the instructions are
signed by buyer and seller. These instructions basically tell the escrow officer what to do
and when to do it, and give her the authority to do her job. But, not all components of a
transaction are handled through escrow. The purchase agreement (contract) contains several
items that are handled by others, such as requests for repairs, exchanging personal property,
removal of contingencies, liquidated damages, and disputes handled through arbitration and
mediation.
When an escrow has “closed”, this means that all of the conditions of the escrow have
been met, the loan has funded, documents have been recorded, and the property and proceeds
have legally changed hands. So, what happens in between?
Escrow are people, too!
And very important ones, at that. Just what is an escrow officer? She is a person that
works for an escrow holding company. Sounds easy, right? Think again.
She will process the escrow and handle the monies and documents from beginning to
end, and her duties are numerous. The presiding escrow instructions are the framework for
the escrow officer. She must be a master of her paperwork, including: escrow instructions,
amendments, grant deeds and quitclaim deeds, estimated and final closing statements as
well as HUD-1 documents required by lenders. She also facilitates the request, delivery,
and signing of documents for all parties.
She must comply with local, county, state and federal requirements. If the buyer is financing,
she will work with the lender to help grease the wheels on the loan approval and
underwriting process, satisfy the lender’s conditions, and organize signing loan documents.
She will handle closing funds, okay the release and recording of documents, and is on the
hook for all financial accounting related to the transaction. Another large part of her job
is requesting payoff demands and lien releases, and working to ensure that free and clear
title is conveyed to the buyer and in compliance with the lender.
She may have one of the most demanding jobs in real estate. She is the go-between to
which all buyers, sellers, borrowers, lenders, real estate brokers, and title companies look
for the legal, efficient and competent execution of an escrow. She is the channel for all
parties and the nerve center where sellers, buyers, real estate agents, and lenders go for
updates, questions, and problems.
People often underestimate the value of a good escrow officer. Not all escrow companies
are created equal. The escrow officer should be trustworthy, reputable and efficient; she just
might be the difference between you getting a set of keys or rough, turbulent seas.
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(310) 261-0798
Assoc Broker 31 years/Manager
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