What is Escrow?
Escrow is a dis-interested third party who manages the transfer of funds and real property between a buyer and seller. In essence, Escrow is there to protect both parties’ interests during the transfer. In most cases, Escrow agrees to follow a set of instructions that a buyer and seller have agreed upon and will only act upon mutual consent of both parties. These instructions generally come in the form of a purchase agreement of some form. For the interest of this post let’s assume we are transferring a single-family residential property. A purchase agreement must have certain terms within it in order to be enforceable. Price, terms, date, individuals involved and signed mutual agreement are all needed in a contracts most basic form. As you could imagine, a Residential Purchase Agreement is much more complex and covers a wide range of negotiable issues and disclosures. Once the Purchase agreement has been fully executed by the interested parties it is delivered to the escrow company and a new escrow is opened.
In Santa Barbara, we only have a few escrow companies to choose from and their costs are pretty comparable. We have First American Escrow & Title and Fidelity National Title. Fidelity also runs Chicago Title in town.
Here is a short video that breaks it down pretty well. Take a peek.