Escrow

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Definition

Escrow is a written agreement held with a third party to hold something of value and then delivered once all conditions of the sale are satisfied. The third party is neither the seller or the buyer. The escrow provider is there to help make transactions safer and does not release any money until both the buyer and seller are satisfied with the transaction and have completed all obligations.

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LAYMEN TERMS

The most common use of escrow is when selling or purchasing a house. The escrow officer makes sure that the conditions of the contract are completed for example if the buyer wants an inspection on the house, the money is not let out of escrow until that obligation is satisfied.

HOW DOES THIS TERM APPLY TO YOU

If you purchased a home and during the sale, you would like to have the house inspected and the roof repaired. The seller wants to confirm that if they complete those obligations that you are going to finalize the purchase of the house.

This is when an escrow officer is used. As the buyer, you will guarantee you will purchase the house while putting an agreed-upon sum in with the escrow officer. The money is then held with the third party escrow until which time the seller completes the house inspection and the roof repair. Once the contract obligations are satisfied then the escrow officer will release the money to the seller and the purchase of the home will be complete.

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