Welcome to the Kazi Law Firm! We are a boutique law firm steeped in Texas tradition personifying the warmth and congeniality consistent with southern hospitality. We believe in preserving integrity and professionalism with true Texan charm, staying true to our roots, while providing essential, affordable legal services to all. Located just north of Dallas, Texas in the rapidly growing suburb of Frisco; the Kazi Law Firm concentrates on contracts drafting and review, immigration law, will & estates, real estate law, landlord, tenant, mediation, and general business law needs.
The term “escrow” is tossed around by realtors in real estate transactions immediately following an accepted purchase contract. Clients often don’t ask their agent what escrow means as to not appear ignorant. However, this is an excellent question and today I want to talk more about this vital concept and explain when buyers and sellers will likely first encounter escrow.
Escrow is defined as a neutral third party that holds important items such as money and documents until the deal is legally closed.
If you’re the buyer and you make an offer on a home you like, you’ll provide an earnest money deposit in the form of a check that will be placed in this escrow. Now, what does that really mean? This earnest money deposit will not go directly to the seller but will be held by a neutral third party, which is escrow. Essentially, it’s comparable to a secure holding area that will house important items—such as money and documents—until the deal is officially closed. Escrow handles the transfer of the buyer’s loan documents and property taxes. The escrow officer works closely with a buyer’s lender and real estate agent to make sure the title of the home is clear of liens before the transfer of ownership.
Escrow officially opens when signed agreements are given to an escrow officer, who will help ensure that the conditions of the contract and any escrow instructions are satisfied. Escrow closes when all conditions have been met and the property ownership is transferred to the buyer.
Why is Escrow Important?
Escrow protects all relevant parties by making sure that no funds and property change ownership until all conditions in the agreement have been met. For the buyer, the escrow can also act as a protection in case the seller failed to do the terms and conditions of the sale, such as passing the home inspection and completing important repairs to specific parts of the home. If the seller hasn’t done his/her responsibilities even after the final walkthrough, he/she won’t get any of the buyer’s money until he/she has made the repairs.
Likewise, a seller can also benefit from escrow. If a buyer gets cold feet at the last minute and backs out of the deal with no legitimate reason, a sizeable amount of money the buyer included in their earnest money deposit will be forfeited to the seller. It serves as a decent consolation for the failure of the sale.
What are the Duties of an Escrow Officer?
An escrow officer or closer (in other states) will be responsible for processing the documents and funds that allow people to buy and sell homes. In other states, it could be a licensed attorney who will handle the escrow, but they often work with a title company representative to do some of the processing. The escrow officer acts as an objective party who transfers money and paperwork between all the people involved in a real estate transaction.
The escrow officer is responsible for the following tasks:
- Communicating with the buyer, seller, and lender in a real estate transaction.
- Determining specific escrow requirements.
- Adhering to the instructions set forth by all parties involved.
- Obligated to protect all funds and documents while in its possession.
- Preparing critical mortgage documents to complete the sales transaction.
- Depositing and disbursing funds in accordance with the instructions.
- Paying all authorized fees, bills, and charges.
- If necessary, the closer will also work with escrow tax documents to ensure that all parties legally comply with state mandates.
- Closing the escrow when all terms have been met, such as inspections, disclosures, and any other objections.
- Providing the closing or settlement statement.
I built my law practice on the premise of being a life raft in a sea of sharks. I want to be an advocate for those that have been wronged and are too intimidated to seek help. My firm is here to explore your options, guide you through your legal journey, and give you that safe space to ask questions! There’s no such thing as a stupid question…Only the ones you don’t ask. So, my question to my clients is not “do you have any questions?” But rather “what questions do you have?”
As always, the Kazi Law Firm is standing by to help you in your time of need. Don’t hesitate to contact us today. We specialize in real estate law, landlord-tenant disputes, immigration, and wills & estate planning. Family is at the core of our practice. Just as we treat our family with respect and understanding, we treat yours. Come join the Kazi Law Firm family today!
Why swim alone in shark-infested waters when you don’t need to?