The meaning of Escrow

In recent years, there have been a number of title and escrow companies that have lost their licenses, settlement attorneys that have been disbarred, as well as many escrow agents that are now serving jail time, for completing various real estate scams and for ways in which they dabbled, dipped into, or otherwise used funds illegally from their escrow accounts. 

The definition of Escrow, according to the Merriam-Webster dictionary, is "a deed, a bond, money, or a piece of property held in trust by a third party to be turned over to the grantee only upon fulfillment of a condition." That means that when you hand over your money to a title and escrow company, they are supposed to hold that in escrow, not only until certain events occur (signing of the deed, for example), but they are to hold those funds for you and no one else. Most often, a title company has only one escrow account where all funds for closings are deposited, but you can almost think of your "escrow" as your own account within that, since legally they are to hold those funds in trust, for your benefit only. We are not allowed to use funds from one closing towards another closing, even if one closing would occur days or weeks before the other. Unfortunately, many times this occurs without anyone being the wiser (other than the escrow agent of course, who is illegally and improperly handling funds), until checks or debits "bounce" and are flagged at the bank and reported to the state. 

I have lost many realtors and loan contacts because of my unwillingness to do the things I've talked about above. But my title company has survived through the years, and our license (and my bar admittance) are still intact because we refuse to give in to the pressure to "do what the other title companies will do". 

Make sure the title company you choose for your closing has a solid track record for doing things right. We definitely do, and will commit to safekeeping your property in escrow exactly as the law requires us to do. 

As always, feel free to message me with any questions or concerns, not only about my title company, but any title, real estate, or legal question you might have. Have a great weekend!