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What Does Close of Escrow Mean?


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TERMINOLOGY

Close of escrow means essentially that a real estate transaction has been completed and that the sale is final.  An 'escrow' is a common feature of standard real estate transactions. They function as an independent third party that holds all monetary funds and documents until the close of the sale. The seller of the property transfers all documents to the escrow agent, who holds them until the buyer transfers the money for the sale to the agent who ultimately transfers it to the seller. Once this is done, it completes the transaction and is known as the closing of escrow.

The Legal Function of Escrow

The closing agent handles all vital documents involved in the close of the sale, including insurance receipts, deposits and closing cost payments. The closing agent is also responsible for registering the mortgage and deed with the appropriate courts. Once the closing session has been successfully completed, the deed to the property is updated with the new seller's name and is given to the lending institution financing the transaction. The fulfillment of this transfer is known as the recording process. Once it is done, the escrow agent releases monetary funds to the seller, provided by the buyer. Once the seller has received the funds and the buyer becomes responsible solely to the lending institution, the escrow has been closed.