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Appalachian Mountain Realty Guide

What is Escrow anyway?

In real estate we often throw the term ESCROW around loosely:

"That house is in escrow" or "This home fell out of escrow and is back on the market" but what is escrow, really?

An escrow is an agreement between a buyer and a seller which directs a neutral third party to prepare and hold documents and funds until the terms of the purchase agreement have been fulfilled by all parties to it.

The escrow holder impartially carries out the written instructions provided by the principals. The escrow holder will not offer legal or investment advice or help a buyer or seller negotiate obstacles in the transaction. A good escrow officer can help your transaction move smoothly, and a poor one can make a sometimes difficult process even more so.

Typically, the escrow will be opened by the buyer's or seller's agent within a day of the final acceptance of the purchase contract. Just how long an escrow lasts is negotiable (whatever length the purchase contract stipulates) but is typically 30, 45 or 60 days. During escrow, the buyers inspect the title and condition of the home and pursue financing as agreed upon between the parties involved. After all the buyer's contingencies are satisfied and the loan is approved, the lender delivers loan documents to the escrow officer, who then prepares all the additional documents necessary to complete the sale. The escrow officer also orders the paperwork needed for the seller to pay off any existing liens against the property so that clear title can be passed to the buyer.

When all the instructions have been carried out and outstanding funds have been collected, closing can take place. All fees, such as title, termite company charges and commissions, are then paid and title to the property is transferred under the terms of the escrow instructions. Escrow is "closed" after title to the property passes from the owner to the purchaser. The escrow officer accomplishes this by preparing and recording the Grant Deed, which is the document that transfers title. Escrow fees are determined in the sales contract and will vary between companies.


Serves as communications liaison to all parties in the transaction.

Prepares escrow instructions from the purchase contract and delivers them to the buyer and seller.

Orders a title search to establish the present condition of title.

Orders a statement of debt (the "demand") from the current beneficiary, if any.

Prepares all deeds and documents related to the transfer of title.

Receives and holds purchase funds from the buyer.

Instructs title to issue title insurance policies.

Prorates taxes, interest, insurance and other costs and fees and disburses payment from principal's funds as directed.

Records deeds and documents as instructed.

Prepares final statement (the "settlement") for all parties, which accounts for the disposition of all funds deposited in escrow.

Thinking of buying or selling real estate? Visit the Appalachian Mountain Realty Guide.
Realtor and For Sale by Owner real estate listings with a great selection of mountain homes and land for sale.


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