OT: stupid question, Escrow? Options

[SirAndy]

How exactly does Escrow work? (IMG:style_emoticons/default/idea.gif)

from what i gather, the escrow company is kinda like a Notary with a Bank and i put in the funds and they'll hold them until certain terms in the sales contract are fulfilled and then release the funds to the seller ...

am i close?
(IMG:style_emoticons/default/shades.gif) Andy

[HeavyHeavy]

More or less. It depends a little on the context.

Let's say you purchase a house on a real estate contract (as
opposed to a normal closing where you would receive a deed
right away). In a deal like that, the owner of the property
holds the note and is still on the hook for paying that
while the buyer on the real estate contract takes possession
and makes payments - usually to an escrow company. It is
the duty of the escrow company to accept the monthly
payments and either put it toward the owner's mortgage or
pay the owner so he can do it.

The escrow company is basically a disinterested third party
that makes sure both sides are getting a fair shake. In the
example of the real estate contract, the escrow company
holds a warranty deed and a special warranty deed. If the
buyer pays off the real estate contract, the escrow company
will make sure that the warranty deed from the seller to the
buyer gets recorded at the county clerk's office. If the
buyer defaults, the escrow company records the special
warranty deed from the buyer back to the seller.

An escrow officer usually works at a title company and not
an escrow company (at least here that's how it works). The
job of an escrow officer is to do the closing, but is still
just a disinterested third party that makes sure everyone
involved in the transaction gets a fair shake.


Jamie