What is close of escrow?
The close of escrow simply means the a real estate transaction is complete and the sale is final. An “escrow agent” is common but can be different than the “closing agent” but can also be the same depending on the preference of the buyer. An escrow agent functions as an independent third party that holds the earnest money deposit and transfers those funds to the “closing agent” a few days prior to closing.
The closing agent prepares and retains all documents required to convey title to the buyer. Additionally the closing agent receives funds from all parties i.e. buyer, lender and escrow agent if applicable. Once the closing agent has received all funds and the executed documents they can disburse to all parties and record the Warranty Deed transferring the property from the seller to the buyer. And this is known as the close of escrow.
What is the escrow period?
The days and weeks in between the contract signing and the closing date as specified in the contract is the “escrow period”. It usually lasts between 30 and 60 days and is specified in the contract. As a home buyer you will be busy with various tasks during this time, depending in particular on what contingencies are placed in the contract. If, for example, there is an inspection contingency then you will need to hire an inspector, review the inspection report and negotiate any needed repairs. The inspection period allows you to cancel the contract if the parties are not able to come to an agreement regarding the repairs or defects found by the inspector. Additionally you will need to obtain property insurance and possibly submit an application to the Homeowner’s Association, as well as set up an interview, if applicable.
What is the closing?
Closing a real estate sale is closely related and connected to the closing of escrow: it’s when the deal is complete and both parties get what they bargained for i.e. money for the seller and a home for the buyer.
In most cases the sales contract contains a closing date which is when the final documents are executed and funds are exchanged. It’s the date the buyer becomes a new homeowner and the seller no longer has an interest in the property. For the closing to proceed all issues regarding matters such as financing and insurance will need to have been resolved.
Can you move into the house on the closing date? The answer is yes unless otherwise agreed. The buyer takes possession of the property the day of closing in most cases but this can certainly be negotiated provided both parties agree.
Protections for the buyer may also be reflected in an escrow agreement. If the parties have reached an agreement for the seller to remain in the property beyond the closing date funds can be held in escrow until such time the buyer is able to proceed with a walk thru determining the property is in an acceptable condition.