What is escrow?

Question

We are 1st time homebuyers or fixing to be. I have been researching all these terms, but i dont understand escrow...there's escrow account, escrow on the house. What is this..and i even heard the escrow company. Can someone please tell me what this is, and explain each explaination on ESCROW?????

Answer 1

Escrow just means a place to keep your money. It can be used in a variety of contexts. In a home buying context it means the person or business who will keep the earnest money before you buy the home. This is hte money you put down before you actually buy the house to say that you are serious about buying the house. The escrow company keeps the money until you either decide to buy the home or walk away. If you buy hte home usually the money goes to the price of the home and if you don't buy the home then it can either go to the seller or the buyer depending on your reason for not buying.

Escrow can also mean the account you keep to pay taxes and insurance on the home. The mortgage company may require it so that they are sure you are always paying your taxes and insurance. You have to put a bit of money into the account each month (usually part of your mortgage payment) and then the money from the account is used to pay the taxes and the insurance throughout hte year. It saves homeowners a lot of worry and mortgage companies a lot of worry.

Answer 2

I believe escrow is a 3rd party that holds the $ while the buyer and seller finalize the contract/deal.

Escrow is a legal arrangement in which an asset (often money, but sometimes other property such as art, a deed of title, website, or software source code) is delivered to a third party (called an escrow agent) to be held in trust pending a contingency or the fulfillment of a condition or conditions in a contract such as payment of a purchase price. Upon that event occurring, the escrow agent will deliver the asset to the proper recipient, otherwise the escrow agent is bound by his or her fiduciary duty to maintain the escrow account.

Answer 3

Escrow is a legal arrangement in which an asset (often money, but sometimes other property such as art, a deed of title, website, or software source code) is delivered to a third party (called an escrow agent) to be held in trust pending a contingency or the fulfillment of a condition or conditions in a contract such as payment of a purchase price. Upon that event occurring, the escrow agent will deliver the asset to the proper recipient, otherwise the escrow agent is bound by his or her fiduciary duty to maintain the escrow account.

Not all escrow agreements impose the duties of a legal trustee on the escrow agent, and, in fact, in many such agreements, escrow agents are held to a mere gross negligence standard and benefit from indemnity and hold harmless provisions.

While escrow is best known in the United States in the context of real estate (specifically in mortgages where the mortgage company establishes an escrow account to pay property tax and insurance during the term of the mortgage), escrow companies are also commonly used in the transfer of high value personal and business property, like websites and businesses, and in the completion of person-to-person remote auctions (such as eBay).

Escrow is also known in the judicial context. So-called escrow funds are commonly used to distribute money from a cash settlement in a class action or environmental enforcement action. This way the defendant is not responsible for distribution of judgment monies to the individual plaintiffs or the court-determined use (such as environmental remediation or mitigation). The defendant pays the total amount of the judgment (or settlement) to the court-administered or appointed escrow fund, and the fund distributes the money (often reimbursing its expenses from the judgment funds).

In some jurisdictions, real estate brokers are considered to act as escrow agents when they accept deposits or earnest money for the purchase of real property. In many jurisdictions, the duties of such agents are codified.

Source code escrow agents hold source code of software in escrow just as other escrow companies hold cash. The highly valuable (and often secret) source code is only released by the agent to either party upon specific terms of the escrow agreement (such as failure to maintain the application, transfer of ownership of the intellectual property rights, or the liquidation of the owner of the source code).

Escrow is also used in the field of automated banking and vending equipment. One example is automated teller machines (ATMs), and is the function which allows the machine to hold the money deposited by the customer separately, and in case he or she challenges the counting result, the money is returned. Another example is a vending machine, where the customer's money is held in a separate escrow area pending successful completion of the transaction. If a problem occurs and the customer presses the refund button, the coins are returned from escrow; if no problem occurs, they fall into the coin vault.

Answer 4

Escrow is the name for moneys you pay along with your mortgage payment, that the mortgage company collects for the payment of other charges related to the property.

A mortgage lender may escrow funds for:
1. property taxes
2. property insurance
3. mortgage insurance, in some cases.

When the lender collects these funds for escrow, you dont pay your own property taxes, insurance or mortgage insurance. They do it for you.
It helps the lender know that you are keeping the taxes paid and insurance paid (because they do it for you!)

Not all lenders require insurance payments to be escrowed, but property tax escrow is common and almost universal.

Answer 5

Escrow is a temporary account that the title company has before they transfer ownership (usually to a mortgage/or settlement company).

Answer 6

your mortgage co. can take a portion of your payment and put it aside,(in an escrow account) and use that money at a later date to pay for such things as real estate taxes, or insurance on the structure, to protect their interests.

Answer 7

ESCROW

a contract, deed, bond, or other written agreement deposited with a third person, by whom it is to be delivered to the grantee or promisee on the fulfillment of some condition.

Answer 8

escrow is an account set-up that you pay money into when you pay your mortgage. This money is used to pay your property taxes.

Answer 9

Analogous to Purgatory?

Answer 10

It's a crow with a big "S" painted on its back.