An escrow agent, or company, is a neutral third-party, often a title insurance company, which holds all documents and monies as required by the purchase contract and guarantees that no funds or property transfer until all contract terms and conditions have been satisfied,” said Susan Filer, branch manager/senior escrow officer, Pioneer Title Agency, Inc., and board president for the Arizona State Escrow Association.
“Escrow” is different from the “escrow account,” an ongoing home-loan account in which the lender collects monthly funds deposited to it for the borrowers, and from this, pays out the borrowers’ property taxes and homeowner’s insurance when due, she added.
In a transaction, documents and monies required by the purchase contract are deposited into escrow,
coordinated by an escrow agent for “closing” or “settlement,” including recording the transaction with the appropriate municipal recording agency. When this is done, the lending institution usually funds the loan within 24 hours.
Either buyer or seller can employ an escrow/settlement
agent to act on written instructions agreed by both parties. In Arizona, you do not have to be
licenses to provide escrow services but the industry as a whole is licensed by the
Arizona Department of Financial Institutions (AZDFI).
Do you due diligence
“Before choosing an agent, check with that office [the AZDFI], the State Escrow Association and the Better Business Bureau to make sure that the person or company you plan to deal with is reputable,” Filer said.
Escrow service is not required for a real estate transaction in Arizona, but Filler recommends that
both buyers and sellers agree on an established company or individual professional to ensure a
Filer also recommends that the buyer purchase a title insurance policy which protects him or her and lenders from financial loss against possible issues or defects in the title. “A title professional searches the public record — such as property records, tax records and court records — to establish legal ownership of the property being sold, reports to the escrow officer and determines the cure for the title,” she said.