It is customary and prudent for a buyer and seller to have a third, disinterested party to assist them in carrying out the terms of their agreement. In Missouri and Kansas title companies handle escrow. When opening an escrow, the buyer and seller establish terms and conditions for the transfer of ownership of property. Your escrow is created shortly after you execute the contract to purchase your home. The escrow becomes the depository for all monies, instructions and documents. The Escrow Officer has the responsibility of seeing that all terms of the escrow are carried out.
How does the escrow process work?
The escrow agent holds all monies, instructions and documents for the purchase of your home, including your down payment funds and your lender’s funds and documents for the new loan. The escrow officer takes instructions based on the terms of your purchase agreement and your lender’s requirements. The escrow officer can hold inspection reports and bills for work performed as required by your purchase agreement. Other elements of the escrow include hazard insurance, title insurance and the grant deed from you to the buyer(s). Escrow cannot be completed until the instructions (requirements) have been satisfied, and all parties have signed escrow documents.
The escrow holder’s duties include:
Serve as the neutral agent and the liaison between all parties involved.
Prepare the escrow instructions.
Request a Preliminary Title Search to determine the status of title to the property.
Comply with the lender’s requirements as specified on its instructions to escrow.
Receive and handle purchase funds from the buyer.
Prepare or secure the deed and documents related to the escrow.
Prorate taxes, interest, insurance and rents.
Secure releases of all contingencies or other conditions imposed on the escrow.
Record the deed and any other documents.
Provide title insurance policy.
Close the escrow pursuant to instructions supplied by the seller, buyer and lender, if any.
Disburse funds as authorized by the instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs.
Prepare final statements for all parties involved that account for the disposition of all funds held in the escrow account.
How do I open an escrow?
Your real estate agent will open the escrow for you. As soon as you execute your purchase agreement, the earnest deposit is given to the title company for deposit into the escrow account. How will you know where the money has gone? The escrow (title company) will provide proof of receipt of the money and that they are holding it to your agent. These funds will then be deposited in a trust account and processed through the buyer's bank.
Escrow Instructions
Escrow instructions define all the conditions that must occur before the transaction can be finalized. Your escrow instructions specify, in a debit and credit format, the disposition of your purchase funds. They also provide for title protection for your home.
What information will I have to provide?
You will be asked to complete a statement of identity. Because many people have the same name, the statement of identity is used to identify the specific person in the transaction through such information as date of birth, social security number, etc. This information is kept confidential.
How long is the escrow?
The length of an escrow is determined by the terms of the purchase agreement and can range from a few days to several months. On average, it takes 30 to 45 days.
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