Q: What is escrow?
A: Escrow is a service which provides the public with a means of protection in the handling of funds and/or documents. Escrow enables the buyer and the seller to transact business with each other through a neutral party, thereby minimizing their risk. In the escrow, all parties involved give their instructions to this neutral intermediary, the “escrow holder” whose duty is to assure that no funds or property will change hands until all instructions have been carried to completion.
Q: What types of transactions go through escrow?
A: Most contracts that involve the transfer, lease or financing of real or personal property can be placed in escrow. You may be involved in escrow not only when you buy or sell a home, but also when you buy a mobile home, sell a business or transfer stock in a closely held business. Prizefighters have even been known to have their purses guaranteed through an escrow depository. The buyer or seller should demand the protection of escrow for any transaction which involves a substantial investment.
Q: Why do I need escrow?
A: Whether you are the buyer or the seller, you want assurance that no funds or property will change hands until all of your instructions have been followed. With the increasing complexity of business, law and tax structures, it takes a trained professional to supervise the transaction.