You've likely heard of escrow as it relates to buying or selling a house, but do you know what it means?
Escrow refers to both a type of business - an escrow company - and a process, i.e. we've opened escrow on our house.
What does an escrow company do?
An escrow company is involved in a real estate transaction in California because they facilitate the movement of documents and funds between buyer and seller. They function as a neutral party in the transaction by preparing and collecting documents, holding the buyer's earnest money deposit, and setting up time for the buyer and seller to sign the deed, loan docs, etc.
What does it mean to "open escrow"?
When a seller has accepted a buyer's offer, the parties are said to be "in escrow". A whole chain of events gets put into motion, from the buyer wire transferring their earnest money deposit, to the escrow company assembling escrow instructions for each party and inspection appointments being made.
The buyer and seller will be connected together through the transaction, until it concludes and they've "closed escrow". At this point, the buyer is now on title as the new owner and he/she gets the keys to their new home!
