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Escrow Holder


Neutral third party escrow officer tasked with collecting funds and documents and dispersing them when one or both parties satisfy an element of an agreement.


The person responsible for performing tasks on behalf of the escrow company is an escrow agent or escrow holder. The escrow agent serves as the representative that helps facilitate escrow duties on behalf of the buyer and seller. Escrow agents inform parties of the transaction of any required documentation or money transfers that must take place for the transaction to move forward.

The duty of the escrow agent is not to push either client to perform certain tasks; rather, it is his or her duty to inform all parties of obligations that must be met to facilitate trade before the sale of the property can be executed. Upon all conditions being met by all parties, funds will be released to the seller and subsequently the buyer will take title of the property.

Escrow companies engage in two major aspects of a real estate transaction. The first role is to facilitate the sale itself and the second role, although not typically required, is to help the buyer attain financing for the purchase of a property.

Role of Escrow Holder

The escrow agent is tasked with informing all parties of their required duties. This includes collecting necessary funds-deposit amount and total sale amounts. To facilitate a real estate transaction, the escrow agent will inform clients of necessary documentation, such as the basic contract forms and obligations, and informing parties of information regarding the promissory note. The escrow agent’s duty includes properly managing escrow funds, and verifying that all funds are used for their intended purposes. This includes transferring money and title upon conditions met by the buyer and seller.

To facilitate the transaction the escrow agent will:

Verify that all documentation is signed by client(s)

Verify availability of necessary funds before moving forward the transaction

Calculate any charges that may arise for each party

Again, the duty of an escrow agent is not to push the transaction; rather, it is the escrow agent’s duty to inform all parties of every responsibility they must meet to complete the transaction.

Upon all parties meeting the necessary conditions, the escrow agent will move forward the transaction. To move forward the real estate transaction, the agent will transfer the necessary finalized documents and funds. One of the last steps of a real estate transaction is the close of escrow, which involves the transfer of finalized funds and documentation.

The close of escrow will then proceed with a settlement statement, which is a statement that details all the fees and charges for which a homeowner is responsible. Typically, it will take one to five business days for escrow to close, assuming all conditions are met. With all the funds and documentation already complete, neither party needs to physically be present to close the transaction.

Duties of an Escrow Holder

The main duty of an escrow holder is to follow the instructions set forth in the purchase agreement. It is not the escrow holder’s duty to create instructions, rather they must simply follow what is provided to them. Instructions can be found in the escrow instructions and purchase agreement which states what should happen based on the accomplishment of a specific task such as paying money based on a certain date and the occurrence of a specify event after that. Funds, paperwork, and others will be distributed based on one party, either the buyer or seller, meeting their directions and will be distributed by the escrow holder.

Main Duties of the Escrow Holder

As stated above, the main responsibility of the escrow holder is to follow directions indicated in the purchase agreement and escrow instructions. Escrow holders release money when a certain condition is met, such as releasing contingencies, or transferring documents to the appropriate party after something required happens.

Communicating with the principals is one of the main tasks of the escrow holder. While the bulk of the transaction moves forward due to the actions of the buyer or seller, escrow holders have the ability to speed up or slow down the escrow process. Escrow holders should be proactive and anticipate needs before they occur to prevent a slowdown in the process. Communicating these needs is vital to closing on time.

Finding an Escrow Holder

Both the buyer and seller have the ability to choose the escrow company they wish to work with. Typically, sellers choose the escrow, however buyers have the right to make suggestions and have influence in choosing them as well. Brokers of the principals oftentimes may suggest the escrow as well, either through experience with that firm or because of cost. It is against the law for brokers to choose an escrow because of a referral fee they will receive as this clearly presents a conflict of interest.

The real estate purchase contract contains information relating to the escrow holder.

Section 24 of the Joint escrow instructions to escrow holder of the Realtors Purchase Form indicates the following: The terms of the agreement are used as instructions for the escrow holder and those involved in the transaction.

Prorations and Escrow Holder

Once the escrow holder has received all the necessary information, the holder will then compute all prorations, which will be charged to the buyer and seller. This includes items such as insurance, taxes, security deposits, utilities and other assessments.

Proration is the adjustment of expenses, liabilities, and payments according to the date in which property is purchased or leased. Property rented in the middle of the month will typically be prorated based on the number of days left in the month to avoid the tenant and landlord from over or underpaying for the period the property was or was not purchased/leased.

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