Posted on Friday, November 12th, 2021

escrow for real estateThe Basics of Escrow and How it Can Help with Buying a Home

If you are new to the process of buying a house, you may never have heard of escrow. How essential is it for home buying? There are several benefits you should keep in mind when it comes to dealing with escrow in real estate.

What Is Escrow? 

If you are interested in purchasing a home, you will likely be required to place funds into escrow at the outset of the transaction. If you are new to real estate, it is essential that you understand what escrow means and what it is all about. An escrow account is a type of account that is held by a third party and not by the buyer or the seller in the transaction. The third party has a fiduciary obligation to the parties to act fair and impartial in the transaction and such third party may be a real estate brokerage, a title agent or an attorney. In other words, the escrow agent should be an independent third party who has no vested interest in the property being sold.

Once you have agreed on a price with the seller, it is important that you both agree on an escrow agent who will serve your mutual needs. With the competence and professionalism that our Orlando FL Real Estate Lawyers possess at Nishad Khan PL, you can trust that your escrow deposit will be held by lawyers who are ready to stick to the fiduciary duty owed to the parties throughout the course of the transaction. 

What does an escrow agent or company do? 

The escrow agent or company may do some or all of the following:

  • Hold a down payment in its escrow account until closing on the house is complete
  • Apply any down payment funds received in escrow towards the purchase price at closing
  • Apply any funds received in escrow from the lender towards the purchase price at closing
  • Remit any payment that is owed to any of the vendors, professionals or agents who supplied services to any of the parties for the closing
  • Remit any payment that is owed to satisfy any liens and/or encumbrances on the subject property
  • Disburse any remaining net proceeds to seller at closing

How Does Escrow Fit into the Home Buying Process? 

Once you place an offer on a house, the seller may require the buyer to demonstrate a commitment to purchase the house through the payment of some earnest money to a mutually agreed upon escrow agent. These earnest money funds, also known as a deposit, are best placed into an escrow account until you close on the house and disburse the closing funds. The benefit of this is that you’ll give the seller some assurance because, by making an earnest money deposit, it shows your seriousness in wanting to perform the terms and conditions of the contract for sale and get to closing.

In a scenario where the payment of an escrow deposit is required, the contract will direct the buyer to deposit the moneys with a mutually designated third-party escrow agent. The contract will also provide the amount of the deposit that will need to be paid into escrow and the specific timeframe for when such deposit will need to be paid into escrow. In this circumstance, it is important for the buyer to pay attention to the specific timeframe for when the deposit will need to be paid and to ensure that he or she adheres to that specific timeframe. Paying attention to material provisions within the contract are very important as failure to adhere to any of those contractual obligations could result in a default and in forfeiture of the deposit under the contract. Getting clarification on these types of provisions will help to ensure that any moneys paid into escrow do not later become the subject of an escrow dispute. Therefore, to avoid scenarios where a deposit paid into escrow later becomes the subject of an escrow dispute, it is always advisable that you are in constant consultation with Real Estate Lawyer in Orlando from the law office of Nishad Khan P.L.

Use of an Orlando Real Estate Attorney for Escrow 

Every aspect of a real estate transaction has its legal framework, and the same applies to escrows, as escrow agents have their own fiduciary obligations to adhere to, in connection with real estate transactions. Given this, when it comes to handling escrow, it is ideal to work with Real Estate Attorneys in Orlando FL for your escrow matters. This is because they will professionally and efficiently assist you with complying with your escrow obligations under your contract for sale. Put your trust in an Orlando Real Estate Law Firm with lawyers such as Nishad Khan P.L. and you are sure to be pleased with the results you see.