Escrow is actually an old, French-Angle word that meant a piece of parchment or fabric, but it has obviously changed meaning over time. In today's real estate world, it is the process through which a property is placed with a third party. Once all of the conditions in the escrow instructions are met, then escrow can close.
Close of escrow is the actual culmination of the real estate transaction whereby there is a legal transfer of the property title to buyer from the seller. Normally, a deed of trust and grant deed are recorded within one working day from the time the escrow holder receives loan funds, completes the necessary transactions and signifies that escrow is closed.
The process sounds very simple, and it can indeed be simple as long as escrow instructions are clear and very well detailed. Escrow instructions need to be provided in detail because the escrow agent cannot be left to guess intent. In fact, the escrow holder can do no more than follow the escrow instructions. The escrow officer cannot exceed the escrow instructions since they are a legally binding agreement between the seller and buyer for the purchase of the real estate and transfer of the property title.
The process gets convoluted when there are misunderstandings regarding the closing process. In fact, escrow closing or settlement is one of the main problem areas occurring in real estate deals. Escrow closing is misunderstood and generally feared by many people, and it is probably not understanding the process that generates fear.
If you want the process to go smoothly on your behalf, then you should prepare for it. Take a careful look at the guarantee of title insurance or preliminary report and verify that there is an exact, legal description of the property you are purchasing. Be sure that the real estate you are buying is free from any and all encumbrances and liens and that anything you did not agree to has been removed.
The escrow or title agent must have your correct vesting, meaning the way you want to take title to the property. If you make sure of this beforehand, you are going to save a lot of time because correcting vesting on a deed after closing takes a whole lot of time.
Before closing of escrow, make sure that the conditions of the purchase agreement have been honored. You must also be sure that all the instructions given to the escrow or title agent have been followed and performed. On the day of closing, before you sign your name to any closing documents, check that everything is correct such as interest rates, fees and the condition of the property, then check everything one more time.
The only way that you are going to avoid problems is by knowing what you are supposed to do. It is okay to read any and all documents and to take your time before signing them. You cannot simply sign your name to everything and then expect that mistakes will be corrected without any hassles if indeed there are any mistakes.
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