Escrow
The issue of whose escrow it is and whose money it is, seems to come up whenever there is escrow trouble.
Like it or not, here is the short answer: Escrows, money and properties therein belong to both parties and cannot be released without mutual agreement.
Escrow was established to hold everything in trust till the deal closes according to deal points already agreed. Escrows and Trust Deeds were the result of a long history of difficult dealings. Both were established to smooth over the rough edges of real estate transaction, providing relative safety for all parties. Over the years, law, policies and procedures have been developed to further protect both sides of a real estate purchase.
- Escrow is an intermediary with a fiduciary responsibility to all parties in the escrow.
- Monies and property put into escrow CANNOT BE RELEASED BY ESCROW WITHOUT WRITTEN CONSENT OF ALL PARTIES.
No matter how badly the transaction is going,
- The Seller cannot get the property released from escrow and
- The Buyer cannot get their good faith deposit back
Unless everyone agrees on the release.
This is why there are escrow forms for that purpose and why putting money in escrow for short sales requires caution.
- Sellers can sell the property to someone else and open a second escrow elsewhere while the Buyer's money remains tied up in escrow
- The Buyer can file a lis pendens to cloud title and disallow the Seller from selling to someone else.
- The Buyer has to prove harm to file a lis pendens.
- When everything is all done and the transaction is ready to close, escrow provides a HUD-1 (good faith estimate) of the closing results for both sides.
- Review the HUD-1 carefully for errors over overcharges. It happens.
- If all parties cannot agree, court action determines resolution (usually small claims court for buyers)
Elevate agents and clients are free to select any escrow company they choose. Elevate does recommend that at least three escrow companies be interviewed before an escrow provider is selected. Also it is best to avoid "captive" escrow companies owned or managed by a real estate broker (DRE liocensed). In the event of conflict these escrow companies tend to align their decisions with the supervising broker.
