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Understanding The Role Of An Escrow Agent During Mortgage Transactions
An Escrow Agent, or Escrow Officer, is an unbiased professional who acts as a third party. Their job is to work for both the buyer and the seller. The third-party person must ensure both parties fulfill their obligations as per their Escrow Agreement.
The officer will carry out all the possible checks without being biased to make sure none of the two parties involved suffers loss through the transaction. The officer has to finish the check before the buyer releases the money.
What Does the Expert Do?
The Escrow Agent operates as per the terms of the contract or the Escrow Agreement. For example, in buying a property, the buyer enters into a borrowing agreement with a lender who deposits the money into an escrow account. A buyer can also deposit money into the account in good faith that the seller will fulfill their obligations agreed upon to facilitate the closing of the sale of the property.
It is the agent’s responsibility to ensure the sale amount for the property is deposited into the account, and the seller also deposits the deed to ensure safety. Once the two parties fulfill their obligations as agreed, the middle man can release the money in the said account. Then, they can deposit that money as a partial payment of the house. The most important is ensuring that the professional does not have any interest in the funds and serves the two parties equally.
Contractual agreements are not used in real estate alone, the Escrow Specialists are also needed during business mergers or buying and selling of stocks. Another time when the services of an Escrow Specialists are required is during business acquisition. The main aim is to ensure that no one avoids the obligations stipulated in the sale, merger, or acquisition agreements.
Duties of an Escrow Agent
An Escrow agent is an attorney or an employee under the obligation to work and act following the instructions of the Escrow Agreement. The Escrow Specialists must be ready to follow their duties as stated in each specific contract. Together with that, the officers also have to carry out the following duties:
• Oversee the Account
When it comes to real estate, the professional has to scrutinize the assets deposited in the account by the buyer are accurate and up to date.
• Ensure the Parties Hold to Their Obligations
One of the primary roles of an Escrow Officer is to ensure that the responsible parties keep to their obligations. Some of the agreements that must be met include the inspection of the said property and the same appraisal. Also, the officer must ensure the buyer secures financing within the contract’s specified time.
Disbursing the Funds Held in the Custody of the Escrow Officer
During the closing of the real estate sale, after the involved parties meet all their responsibilities as stated in the contract, the officer disburses the money in the account to the seller. At the same time, they also hand over the deed to the buyer and close the escrow account.
Who Chooses an Escrow Agent or the Officer?
When buying a property through a loan, the loan officer is the one who chooses the agent they want, but if there are two officers, it is the seller’s listing officer who chooses the other agent. Because the loan officers have companies they work with, the buyers, in most cases, will work with the agent the lender chooses. But there are certain times when the buyer may request to work with a different company.
Closing services in real estate are essential, and the buyer needs to shop for a reliable closing agent. Also, it will be good to shop for other services like title search, survey fee, title insurance, and pest inspection fee.
Working with a professional makes the closing process more straightforward. That is because the experts understand everything about closing the transaction and will help you understand the process of closing and the complex paperwork involved. The only thing that you should not do with such a professional is to seek advice concerning your home purchase.
The Law and the Binding Agreement
During the application for a mortgage, you need a mortgage processor or a loan processor responsible for handling the loan or mortgage application paperwork. The mortgage processor acts on behalf of both the loan officer and the underwriter to ensure the loan information is valid and approved.
Once the loan is approved, both the buyer and the seller require the services of an escrow officer. And for an escrow to be valid, the following must take place:
• There must be a binding agreement between the buyer and the seller
• There must be a contract detailing the need to transfer instruments or money deposited to a third party.
The individual carrying out the duties of an escrow agent must work within what is stipulated in the signed agreement binding the two parties. That means the person must be willing to follow the instructions given in the escrow agreement, work in good faith, and have the right skills. The most important responsibility is to ensure that all the goods are delivered on completing the conditions given as promised and agreed upon by the two parties.
What an Escrow Officer Cannot Do
The two parties involved in the sale of real estate must make some promises that they must follow to fulfill. Those promises should be listed on an escrow so that the escrow officer can verify that both parties fulfill all the promises. The middle man cannot add or remove anything from the escrow, and if that happens, then the entire contract becomes invalid. Therefore, the Escrow Agents are held responsible by law to carry out their duties as per the contract. They must follow what the seller and the buyer agreed without making any additions to the Escrow Agreement.
An escrow who fails to follow the instructions as agreed by the parties is held liable by tort law and for breaching the contract. When the two parties are making promises to each other, they must do that as per the law. They do not come upon with their own set of rules, but they have to do everything s per the law.
Disclaimer: This article is meant for educational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
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