Escrow account
If escrow is the legal “moment” where assets are held by a third party (an escrow agent) hired by both the buyer and the seller of goods like real estate and insurance until the transaction is completed; it is only natural for the escrow account to be the “place” where the monies of this transaction are held.
For instance: a home buyer and a home seller go into an agreement regarding the fair market value of the house. Home buyer and home seller open an escrow account where the first will deposit the earnest money to the latter and - at least metaphorically – for the latter to store the title of the house to the first because during escrow he is not allowed to touch the house title and sell it to anyone else. They open the escrow account because, if the home inspection unexpectedly shows something unwanted, the escrow agent will be able to return the money to the home buyer, while the home seller will have the security of knowing that the home buyer has the funds to “put his money where his mouth is”. Because the dispute over the findings of the home inspection would commonly go to a “my word against his” that would lead to court battles, and, most of the times, once it was settled, the losing-part would say “well, I don’t have the money anymore” or “Well, I already spent the money”, real estate agents decided to institute a way to secure the money of the transaction, and that was a third-party temporary account: the escrow account.
Once all due diligence regarding the home is done, the escrow agent transfers the funds to the home seller and the transfer of title is done.
Being a temporary account, it gets closed right after all contract conditions in connection with the transaction are met.
Real Estate Tips:
Use our Real Estate Glossary as a real estate knowledge escrow account! Search away until you can't take it anymore and you decide to find a real estate agent to transfer the title of responsible for the home buying/home selling process!
Popular Real Estate Terms
As a hopeful house hunter, renter, or seasoned real estate investor, you've probably come across baffling terms. One such term is "adhesion contract." It might sound complex, but don't ...
(1) Methods that involve discounting the future cash flows generated by an income property. These techniques are used primarily for valuation. (2) Methods of selecting and ranking ...
A recorded plat defines a subdivision map that you have to file in the county recorder’s office. It will show the location and boundaries of your parcels of land. Knowing this, we can ...
(1) Judgment against a defendant who does not respond to the plaintiffs lawsuit or fails to appear in court at the hearing or trial date. (2) Judgment issued by the court against the ...
Characteristic of a trust that prevents the invasion of its principal by the trustees while providing a lifetime income to its principal beneficiary with the rest going to the son's ...
Legal lien on property on behalf of an individual who has not been paid for material furnished in constructing property. The material enhanced the value of the property, and as such the ...
Homes with division of ownership or use of a resort unit on the basis of time periods. For example, a resort home may be divided into 25 time shares of two weeks each, with two weeks left ...
A reassessment or a reappraising is a decision or strategy made by the owner or the state or local authorities. The reassessment definition is a revision of an earlier assessment. Property ...
Underground pit or tank used to store sewage. ...
Have a question or comment?
We're here to help.