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Why do I need an Escrow?
Whether you are the buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the escrow holder, and to disburse funds and/or convey title only when ALL provisions of the escrow have been complied with.
Who chooses the Escrow Company?
The selection of the escrow holder is normally done by agreement between the principals. If a real estate broker is involved in the transaction, the broker may recommend an escrow holder. However, it is the right of the principals to use an escrow holder who is competent and who is experienced in handling the type of escrow at hand. There are laws that prohibit the payment of referral fees; this affords the consumer a best possible escrow service without any compromise caused by a person receiving referral fees.
What fees and costs will be charged?
Escrow fees are not regulated by the State. Escrow holders, like any other businesses, will charge fees that are commensurate with the costs of producing the service, the liability undertaken, and the overhead expenses, which include a profit factor. Therefore, the fees will vary between companies and from county to county. Normally, the escrow holder will follow its minimum fee schedule, which will provide for extra charges based on the differing elements of your escrow. On occasions, an additional fee will be charged for unusual expenditures of time on a given transaction. The escrow holder has no control over the costs of other services that are obtained, such as the title insurance policy, the lender's charges, the insurance, recording charges, etc. Your escrow officer, upon request, can provide you with an estimate of the escrow fees and costs as well as fees charged by others, provided such information is available.
What about cancellations?
No escrow is opened with the intention that it will cancel, but there are occasions when a contingency cannot be met or when the parties disagree during the pendency of the escrow. Some escrow holders provide for such an event by incorporating an instruction in the typed or printed "General Provisions." Ordinarily, the escrow holder cannot disburse the buyer's funds until the escrow holder is in receipt of mutual cancellation instructions signed by the principals. The escrow holder cannot make a determination as to who is the "rightful" party in a dispute on cancellation and therefore will not return the funds or documents until the principals agree-- the escrow holder is not a judge.
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