Defining Escrow and its Role in a Transaction
Escrow is defined in Wikipedia as legal arrangement in which an asset is delivered to a third party (called an escrow agent) to be held in trust pending a contingency or the fulfillment of a condition or conditions in a contract such as payment of a purchase price. Hawaii is a state that uses an independent third party escrows for real estate transactions. This role of escrow agent is fulfilled by Title Companies. The title company holds the seller’s title in safe keeping until all terms of the contract are completed. Escrow holds the buyer’s funds securely in a trust until the transfer of title on the property.
Escrow is an impartial third party in the transaction that responds to the written instructions of both buyer and seller. They also work with the other parties that may be involved in the transaction including real estate brokers, agents, lenders and attorneys. The title company conducts title searches to ensure that the property is free and clear and the issuing of Title Insurance. According to Title Guaranty Hawaii, the escrow agent is also responsible for the final settlement between the Buyer and Seller, the recording of the required documents, the payoff of the existing liens or mortgages, and the proration of real property taxes, lease rents, maintenance fees, and any other property expenses to assure an accurate and complete closing. The title company also keeps detailed records of the transaction for seven years.
If you have any questions about the escrow process, contact the Jalbert brothers and we would be happy to answer your questions directly or refer you to a qualified Title and Escrow company.