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Escrow Service Terminology To Know
Escrow services act as professional mediators between two or more parties dealing with a transaction. These experts handle funds that are held in a secure account until the transaction is completed. This type of transaction can involve the timeshare ownership of a townhouse, as well as the foreclosure of a home, or the summer rental of a beach house. Certain legal documents, including the title of the property is typically involved. Some useful terminology that pertains to escrow services can be found below.
Close of Escrow – This refers to the date official documents are recorded and a property title is passed from the seller to the buyer. In other words, the buyer becomes the official or legal owner at the close of escrow.
Indemnity – Insurance that is used against any possible damage or loss. For example, the title insurance policy on a home foreclosure property or townhome purchase is a contract or indemnity.
Covenant – This is a formal agreement between two parties. A covenant is used when a house or property is purchased or rented. It is an assurance or promise that certain measures will be taken regarding the property, and that certain things will not be done.
Earnest Money – A down payment that is generally made by the purchaser of a townhome, house, or piece of real estate. This sum is basically evidence of good faith and is used as a partial payment.
Open End Deed of Trust – This is essentially a deed of trust that secures additional notes for funds in which a lender may advance to a client. This open end deed is commonly handled by escrow services.
Our national escrow association is dedicated to promoting best practices for real estate agents and brokers in the escrow field. Escrow can be a tough subject in real estate, so learn more through our association.
Escrow is a form of transferring funds between two parties, in which the funds are held by a third party until the transaction is complete. Though escrow services are most commonly associated with real estate transactions, it can also be used in association with law, banking, and the transferring of property online over the internet.
In real estate, the escrow payment is usually a portion of the mortgage payment that pays for both property taxes and hazard insurance. It is not part of the actual mortgage or insurance payment. Depending on the company that the escrow account works with, there may be legal regulations requiring the lender to keep the escrow account active for the duration of the mortgage loan. Other banks offer to add escrow services on after the loan for a house has been processed.
Searching for a licensed escrow company is very important. If the escrow title company is not licensed, they are not legally managed by federal codes when dealing with accounts, house title transfers, and auto title transfers. Another common service that many licensed escrow companies offer is assistance with closing house sales, or the transferring of large sums of money from one account to the other once the home is officially purchased. Many individuals work closely with an individual agent or agency throughout the entire closing process for title insurance, and to make sure that all funds are delivered in a timely manner.
Find out more about residential and commercial escrow services by searching for companies online. Check websites for costs and individual fees, as well as the specific services offered.