What is Escrow?
Escrow is a real estate term; when money or property is “held in trust” by a third party and can only be turned over to the grantee once certain conditions are met.
When funds are held in escrow, it can be confusing as to the ownership of said funds. There have been situations in real estate dealings that prompt questions on this very issue between buyers and sellers.
For instance, say a home buyer signed a purchasing contract after putting down $10,000 as an earnest money deposit. But before she signed, she wanted to be smart and added a stipulation in the contract about having the home properly inspected before closing on the home. What if this “smart” move came back to bite her when the home didn’t pass inspection because there were too many problems that needed fixing?
Well, seeing that the results from the inspection were so negative, this buyer could go back and cancel the contract, declaring it null and void. She might then verbally request the return of her earnest money deposit and might be denied.
In this situation, would the $10,000 belong to the buyer or seller? The answer is: neither. It would be the real estate broker holding the money in escrow. Despite any argument, the escrow holder has a legal obligation to hold funds and not disburse money without written authorization.
At this point, a formal letter might be sent to the real estate broker authorizing the disbursement of the $10,000 deposit. This letter would then be given to the seller for signature and once all parties were in agreement, the money would be returned.
However, if the seller would balk and refuse to release payment, a conversation would be suggested to discuss any differences of opinion regarding the contract and its inspection clause; if attempts at communication would fail, the next step would be to file a law suit.
It is wise to deal with a reputable escrow officer in important dealings such as real estate. A legal expert can make the process of financial dealings seem effortless.
For help with your real estate needs contact Eastland Escrows . Located in Southern California, we are fully knowledgeable about the laws when it comes to protecting your money and property. Buyers, sellers, and lenders rely on us as their escrow officer to safeguard their funds. With Eastland Escrows, opening an escrow is a piece of cake!