Frequently Asked Questions
What Is Escrow?
The escrow process was developed to help facilitate the sale or purchase of property. When opening an escrow, the seller and buyer of a piece of property establish terms and conditions to facilitate a transfer of ownership of that property. These terms and conditions are given to a third, disinterested party known as the escrow holder. The escrow holder in turn has the responsibility of seeing that the terms of the escrow are carried out.
Who Selects the Escrow Company?
Typically the listing agent will select the escrow company. As a buyer, or as an agent representing the buyer, you can request to negotiate this term.
The escrow holder could be any disinterested, third party, although some states require that certain escrow holders be licensed. Due to the technical nature of the transaction and because the escrow holder will be handling you money, it is advisable to select an established, licensed, independent escrow firm, such as State Title Escrow, Inc.
Why Choose an Independent Escrow Firm?
Independent escrow companies are licensed by the Ohio department of commerce and must adhere to very strict requirements, known as “Escrow Law.” Escrow Law determines the kinds of qualifications an escrow officer must have, licenses the business must keep, regulations on how to manage files, the amount of insurance the escrow firm must carry, and much more. Independent escrow companies must steadfastly adhere to these regulations at all times.
Controlled, non-independent, or unlicensed escrow companies can be held by attorneys, banks, real estate brokers, mortgage brokers, or title companies. These agencies do not have regulations as strict as those who are licensed by the DOC.
Who Pays The Escrow Fee?
Escrow fees are generally split evenly between the buyer and the seller, however, this term is negotiable. The buyer will bring their portion of the escrow fee into escrow with the down payment and closing costs. The seller’s escrow fee will be paid when the escrow closes and proceeds are disbursed. The seller’s fees are deducted from the proceeds.
See Our Guide To Closing Escrow Costs
What Is The Role of An Escrow Officer?
The escrow officer is trained in real estate procedures, title insurance, taxes, deeds and insurance. They are the middle man, working between the agent, lender, title company, and other entities to ensure all terms of a purchase or sale are met and that all paperwork and agreements are completed and recorded accurately. If there are any issues that arise during escrow, such as a lien on a property, the escrow officer will work directly with the entities involved to resolve the issues and move forward with closing in a timely manner.
It is important for an escrow officer to remain impartial throughout the entire escrow process. The escrow officer, while courteous, will limit comments to the business at hand. This formal behavior is meant for the benefit of all concerned, since the escrow officer must follow the instructions of both parties.
What Else Do I Need To Know?
There is no shortage of rules, regulations, standards, and best practices when it comes to the escrow process. As a consumer, you will want to select a company that is established, reputable, and works with diligence and integrity.
Some things you can do to help guide you in the right direction when selecting an escrow company include:
Ask whether the company is independent or controlled. (Remember a licensed, independent company is held to the strictest standards and is a truly neutral third party, executing the terms of the escrow as mandated by the purchase agreement, and not affiliated with any one agent, agency, or brokerage).
Ask your escrow officer how many years they have in the industry. (More years should equate to a more in-depth knowledge of escrow, real estate, lending, title, and tax regulations and law. This knowledge will aid in ensuring your escrow is closed accurately and in a timely manner).
Call Us anytime. We are here for you and would love to answer any of your escrow questions.