First, a little about "escrow". To finalize the sale of a property, a neutral, third party (the escrow company) is employed to assure the process will close appropriately and on time. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in a Web auction, PayPal is the reliable third party that holds the buyer's cash, and then disburses the funds to the seller.
The escrow holder insures that all terms and conditions of the seller's and buyer's negotiated agreement are reached prior to the sale being finalized. This includes securing monies and certificates, finishing required forms, and getting the release documents for any loans or liens that are to be paid off with the transaction, assuring you have a clear title to your property before the negotiated price is fully paid.
The certificates the escrow agent may obtain include:
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
Upon completion of all portions of the escrow, closing can take place. All debts and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then receive the title to the property and the title insurance gets issued as outlined in the escrow instructions.
The escrow agent gets a payment at the completion of closing. You'll know when it's time to submit the form of payment.