The Secret Strengths Of The Escrow System
During the process of buying and selling residential real estate there will be some point at which the funds have to go from one party to the other, while the title to the property is transferred in the opposite direction. When you are not in a high trust situation and can’t be certain that everything will be fairly transferred you need to have a higher power on your side.
When the stakes are as high, as they are in real estate sales, that need is doubly important. The practice of using the services of a reputable third party institution for closing is the way that real estate sales are carried out in the United States. So the question that lurks in the back of the minds of many buyers and sellers is: How safe is my money during closing?
The Agents Of Closing
Generally the term that describes the actual payment and transfer of real estate is referred to as closing. The term used for the third party companies that make it happen varies from state to state but it is about creating a safe transfer of payment and property during the closing process of a real estate transaction. You will hear the terms escrow, title or abstract company, depending on which state you is dealing with.
The factor that provides safety to the participants in real estate sales and purchases is the institutional nature of the businesses that handle the closing process. Like the real estate profession they have governing.
Look At That Escrow Go
The term escrow is used in some states because it describes the process of holding the title, earnest money deposits and all other elements by a neutral third party. The term title applies because it is the title to ownership the property that is the documented focus of the exchange. The set of documents that define the transfer is collectively referred to as a property abstract.
This gives all necessary and sufficient terms to describe the legal limits of the transfer. The safety of the system lies in the institution and the regulation and oversight that states give it. The escrow or title company acts on ledger entries and instructions to process the transactions.
Take It To The Bank
The transactions themselves are just creating documents and moving them between parties as well as the wire transfer of funds from one bank account to another. Whether it is called an title or escrow company, think of closing like going to the bank, a neutral bank that takes in all the elements of a transaction, subtracts a fee and then sends everything on its way to the correct recipients. That is a process that is about as safe as houses.