What is Escrow in Florida?
An escrow, sometimes referred to as a closing, is an arrangement in
which an impartial third party called an escrow holder becomes the
depository for all monies, instructions and documents pertaining to
the transaction on behalf of a buyer and seller and/or lender after
you enter into an agreement with a lender or mortgage broker to refinance
your home, sign a contract to buy or sell a home or any other property.
The funds are distributed and documents are recorded only in accordance
with the written instructions received from the parties. Once all
the terms and conditions of the written instructions of all parties
have been fulfilled, and all closing conditions satisfied, the escrow
is closed and the transfer of property and money is accomplished
People buying and selling real estate often open an escrow for
their protection and convenience. The buyer can instruct the escrow
holder to disburse the purchase price only upon the satisfaction
of certain prerequisites and conditions. The seller can instruct
the escrow holder to retain possession of the deed for the buyer
until the seller's requirements, including receipt of the purchase
price, are met. Lenders regularly open an escrow to ensure that
loan proceeds are not disbursed until the lender has a valid lien
recorded against the borrowers property to secure their loan. All
parties rely on the escrow holder to faithfully carry out their
mutually consistent instructions relating to the transaction or
to advise them if any of the instructions are contradictory or cannot
COMMONLY USED ESCROW TERMINOLOGY
HOW DOES THE ESCROW PROCESS WORK?
The escrow officer takes instructions based on the terms of your
agreement, whether that is the Purchase Agreement or a lender's
requirements. The escrow officer makes sure that any "clouds"
and liens shown on the Preliminary Report/Title Commitment issued
by the title company are either approved by the party to be insured
or removed before the escrow closes. In the case of a refinance
or loan escrow, that party is the lender. In the case of a sales
transaction, that party is the buyer. The escrow holder can also
hold inspection reports and copies of bills to be paid through the
escrow as required by a lender or as part of the purchase agreement.
Escrow holders can also prepare the documents to be recorded as
part of the transaction, obtain evidence of hazard insurance and
obtain the title insurance. Escrow cannot be completed until these
items have been satisfied and all parties have signed escrow documents.
HOW DO I OPEN AN ESCROW?
In the case of a refinance transaction the lender usually opens
the escrow. In the case of a home sale a real estate agent usually
opens the escrow, or if no realtor is involved because the property
is "for sale by owner", the buyer and seller can open
escrow. Land transactions are regularly opened by the buyer or seller.
As soon as the parties involved have reached an agreement as to
the terms of a sale, an initial earnest money is handed to the escrow
holder, along with the purchase agreement. As a rule, in the case
of a refinance, no money is deposited until the loan has been approved
and the escrow is getting ready to close.
HOW DO I KNOW WHERE MY ESCROW MONEY GOES?
For a sale transaction, written evidence of the deposit is generally
included in your copy of the sales contract. All monies paid to
the escrow holder are deposited in a separate escrow or trust account.
The escrow holder will then send you a receipt for the funds so
WHAT INFORMATION DO I NEED TO PROVIDE?
You may be asked to complete a Statement of Identity as part of
the paperwork. Because many people have the same name, the Statement
of Identity is used to identify the specific person in the transaction
through such information as date of birth, social security number,
etc. You might also be asked to provide a mailing address. All of
this information is confidential.
HOW LONG DO THE FUNDS STAY IN ESCROW ?
The amount of time necessary to complete the escrow is determined
by the terms of the Purchase Agreement or the time taken to process
your loan. It is normally 45 to 60 days, but can range from a few
days to several months.
Residential and Commercial Escrow Services
Escrow Closing Services provided for:
Real Estate Brokers and Agents
US Department of Housing & Urban Development (HUD)
Federal National Mortgage Assn. (Fannie Mae)
Lender REO Divisions
Long Term Escrow Services provided for:
Note & Deed of Trust/Mortgage