First, a little about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is brought on to assure your place closes on time and the money exchanging part of closing goes smoothly. A home is said to be in escrow when in the closing transaction, funds is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. For example, in a Web transaction, PayPal is the neutral third party that obtains the buyer's cash, and then hands over the money to the seller.
The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being completed. This includes securing payments and documents, finishing required forms, and obtaining the release documents for any loans or liens that were cleared with the transaction, assuring you have a clear title to your place before the asking price is fully paid.
These are the pieces of paperwork that escrow companies usually compile:
- Fire and other insurance policies
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
Upon completion of all instructions of the escrow, closing can take place. At this time, all payments and dues for inspections, title insurance and real estate commissions are collected. You'll then get the title to the property and the title insurance gets dispersed as agreed upon in the escrow instructions.
The escrow company receives a payment at the completion of closing. You'll know when it's time to submit the form of payment.