What Your Escrow Agency Does For You

Throughout the United States, including Florida and Cape Coral, escrow agencies play an important role in the home-buying process. But the duties of the escrow agent are often invisible to buyers. This article will help shed some light on what escrow means to you.

Escrow Is More Than Just Earnest Money

Most people are familiar with escrow as meaning "earnest money." When used with this connotation in mind, the term refers to the money a buyer includes with their purchase offer to indicate to the seller that they are serious about purchasing the property, hence the term "earnest." However, that is not the only use for the term. Escrow can be used as a noun or a verb or even an adjective. It is used as a noun in the example above. As a verb, escrow means to place an item into an account. As in, "I put my property taxes in escrow." And as an adjective you may hear it used in the term "escrow agency," which is a company that has fiduciary responsibilities over a transaction.

The Fiduciary Responsibility Of Escrow Agents

You may write a check for your earnest money payment and never think twice about where it goes or who holds it, but that job belongs to the escrow agency. The most primary duty of the escrow agent or agency is to serve as an impartial third-party holder of funds, documents, deeds, inspections and research related to the purchase of any real estate property. It may be helpful to think of the escrow agent as a depository for all the paperwork needed to complete a real estate transaction.

The players involved in a real estate transaction may be the buyer, seller, their attorneys, real estate agents, the mortgage lender and any combination of the above-mentioned. As the paperwork comes in from all sides involved in the transaction, the escrow agent will review the documents and verify that each is properly completed. Checking them against those that come in from the other parties involved and addressing any discrepancies is a primary duty of the escrow agent.

Your escrow agent will ensure that no funds change hands until all of the requirements to sell the property have been met. Their job is to make sure the transaction gets done properly in accordance with the law. So, although you wrote a check for the sellers benefit, they don't actually receive that money. It goes to the escrow agent who holds on to it until the property closes where it typically gets used to pay for the down payment, some of the closing costs, or you get it back.

The escrow agent can be a real estate title agency or anyone with fiduciary responsibilities. The benefit of having a Florida or Fort Myers real estate title company perform this work in Florida is their familiarity with state and local laws as well as their impartiality. Although escrow agents deal with deeds and purchase agreements and ensure local regulations are met, they are not attorneys and cannot provide you with legal advice.