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Escrow Defined The dictionary defines escrow as the deposit of funds and written instruments with a neutral third party until certain conditions are fulfilled. Basically, escrow is a means for enabling ownership transfers to occur fairly and squarely. Escrow involves an impartial third party brought into a transaction to see that the primary parties, the buyer and the seller, perform as they have agreed they would. Escrow enables a buyer and seller to do business with minimum risk because the responsibility for handling the funds and documents is placed in the hands of someone who is not affected by the outcome. The escrow holder is a disinterested go-between for the parties involved in the transaction, one whose legal obligation is to safeguard the interests of everyone who is affected by the outcome. The escrow process can be more simply defined as the process in which a buyer and seller hire a trusted third person who will act as a stakeholder. In their simplest form those “stakes” are a deed (usually a grant deed) and money. This stakeholder, otherwise known as the escrow agent, will accept the deed from the seller and the purchase money from the buyer and hold it safely for a designated period of time, until he or she can help the principals complete the escrow transaction after all the conditions of escrow have been met. |
