What Is Escrow?

Once you make an offer n a home or other piece of real estate and your offer is accepted, that’s not the end of the story. It’s actually just one step in a somewhat complicated process.

Typically, the next step is for the transaction to be placed in escrow. That means a neutral third party will handle money, documents, and various tasks necessary to proceed to the closing as laid out in the purchase agreement or sales contract. Escrow facilitates the sale process by providing for the efficient transfer of money and paperwork.

Is Escrow Necessary?

The explanation above may leave you wondering if you really need escrow. Unless you live in a part of the country where Round Table Closings are the norm (see below), the answer is almost certainly yes. Aside from the fact that the other parties involved in the transaction will insist on it, escrow protects you by ensuring that no funds or property will be transferred until all the necessary conditions as specified in the purchase agreement are met.

Who Handles Escrow?

Depending on where you live, a specialist at the title company known as a closer may take care of escrow, or an attorney may deal with it. Even if an attorney does handle it, though, he may look to a closer from the title company for some of he processing.

What’s Involved in Handling Escrow?

Whoever he or she is, the escrow officer is responsible for fulfilling the requirements of the buyer, seller, and lender and closing escrow once that’s been done. Along the way, the escrow agent will deal with home inspections, home insurance, repairs as necessary, paying bills, disbursing other funds as required, examining documents, and storing them safely for tax purposes.

Round Table Closings

As mentioned above, in some parts of the country, real estate transactions don’t involve an escrow agent. Instead, the buyer, seller, and real estate agents have what’s known as a table closing.

At a table closing, the seller signs the paperwork that will transfer ownership of the home. The buyer signs the mortgage documents including the promissory note. After that, the buyer’s money is collected, and he or she receives house keys, garage door openers, security codes, etc. Finally, the seller receives the proceeds of the transaction.

Before you actually attend the table closing, you’ll receive such documents as the Loan Estimate, the Closing Disclosure, and other paperwork from the lender’s attorney or other parties involved in the sale. After the closing, you’ll receive a Settlement Statement.

You’ll be required to submit information as well, possibly including Social Security numbers, bank account numbers, and loan and credit account numbers.

Protect Yourself Against Fraud

Whether you’re involved in an escrow or a table closing, be sure to protect your personal data from those who would use it to commit fraud by making sure the email address on incoming emails seems valid. If it doesn’t, let your real estate or settlement agent know at once.

It’s also wise to phone instead of email, using the official phone number on a company’s website or business card. Don’t depend on the number in an email.

Be wary of changes to wiring instructions. Title and escrow companies virtually never request last-minute changes.

Confirm account information before wiring money. Your bank can do this for you.

Verify the transfer of money immediately. Call the title or escrow company and make sure they received the funds.

Finally, if you believe someone has targeted you for fraud, report it to your bank immediately and ask for a Fraud Wire Recall.

Also report the problem to the FBI’s Internet Crime Complaint Center, your regional FBI office, the FTC, and your local police.

And, of course, notify your escrow or settlement agent.

In summary, whether you’re involved in an escrow or round table closing, you’ll need skilled professionals to make sure everything goes off without a hitch. They’ll let you know exactly how the process will unfold and what will be required of you along the way.


True Title, Inc.

507 Longfellow Court, Unit D,
Safety Harbor, FL 34695
Phone: 877-785-8792
Fax: 888-831-0301
Email: info@truetitlefl.net