Title companyWe get asked on an almost daily basis, “What is escrow“? This is a great question, and for most people this question is as mysterious as “Is there alien life on other planets?” or “Why is the sky blue?” Merriam-Webster Dictionary defines an escrow as “a deed, a bond, money, or a piece of property held in trust by a third party to be turned over to the grantee only upon fulfillment of a condition.” This is a great definition of what an escrow is, but when you’re buying or selling a home, a title company does so much more. Below is a description of the many roles a title company plays in the process of transferring real estate from one party to another.

1) Once you’re under contract on the sale or purchase of a home the real estate agent will deliver the fully executed purchase contract along with any addenda to the title company. If you’ve written a check for the Earnest Money and have given it to your agent, he or she will deliver it to the title company, as well. If you’d prefer, you can wire the funds to the title company directly from your bank to the title company’s escrow trust account, or you may deliver a check to the title company directly. If the Earnest Money is in the form of a check, keep in mind that the check will be cashed and placed in the escrow trust account. Arizona is a “Good Funds” state. This means that no funds may be disbursed from an escrow trust account until those funds are physically available for withdrawal in the escrow agent’s Trust Account. You should receive an earnest deposit receipt from the escrow officer and/or your real estate agent. The escrow period is typically 30-45 days in Arizona, but could be longer or shorter depending on the terms of the contract, and how fast the lender can provide funds if you are not paying cash.

2) The escrow officer’s duty is to act as a neutral third party. They do not represent the buyer or the seller. Once the Purchase Contract is received by the title company the escrow officer will review the contract, receipt in the earnest money, will order the Commitment for the Title Insurance, and will prepare the documents required to close escrow. They will take instructions based on the terms of that contract and the lender’s requirements.

3) Once the title company receives your loan documents the escrow officer will call you to make an appointment for you to sign your lender’s package, affidavit, deed, and all other required documents. We recommend that you allow at least an hour for the signing appointment, but ask your escrow officer how long they think it will take. If you’re signing as the seller of the property, the appointment could take only 30 minutes or less. The escrow officer will prepare a pre-audit prior to signing which will tell you the amount of funds required by you to close, if any. You should plan ahead to make sure that the necessary funds will be available at the time of closing. Ask your escrow officer what form the funds are required to be in to comply with the Good Funds law. Escrow cannot be closed until all requirements have been satisfied and all parties have signed escrow and loan documents. After you have signed all the necessary documents the escrow officer will return them to the lender for final review. Once the lender has completed their review, the lender will fund the loan and will notify the lender so that the necessary work can be completed to record the documents and “close” escrow. The deed to your home will be mailed directly to you by the title insurance company along with your Owner’s Policy. This can take up to a couple months.

4) If you are not purchasing the property with cash the lender will require that you order homeowner’s insurance before the loan is approved. You should provide the name, company, address and phone number of your insurance agent to your escrow officer as soon as you know which company you will be using. You should ask your loan officer when they will need this information to make sure the closing is not delayed.

5) There are a number of acceptable forms of identification which may be used during the escrow process. These include, a current or non-expired state issued driver’s license, a state issued identification card, or U.S. Passport. If you are not a U.S. citizen you may be required to present you Alien Resident Card and a state issued identification card. Please check with the escrow officer to confirm what their specific requirements are prior to going to your signing appointment.

6) Once escrow has closed the escrow officer will either call you or your real estate agent to let you know. Then, your real estate agent can deliver the keys to you. This usually happens the same day as close of escrow unless you make other arrangements with your real estate agent. Now the house will become yours to make a home where you will live, laugh and love.

Please note that we are real estate agents and not escrow officers or attorneys. If you have specific questions, you should address them directly to one of those professionals. This information is provided as a guide only, and should not be construed as legal advice.