Joseph & Jodi Hogin, Brokers of ERA Pacific Properties Maui, Hawaii

ESCROW

What is Title?
The purchase of residential real estate is the most expensive long-term financial commitment most individuals or families will ever make. Because of this, all those involved will want to be sure that the rights to the property are clear, that the transfer will be completed expeditiously and correctly, and that their financial interests are safeguarded to the maximum extent possible. Through title insurance and escrow services, Title companies helps all involved parties achieve these goals.
Title insurance differs significantly from other forms of insurance in many respects. While the function of most other forms of insurance is risk assumption, the primary purpose of title insurance is to eliminate risks and prevent losses that can occur when a title is defective.
To achieve this protection, Title departments first performs an extensive search of public records to determine whether any person other than the seller has any right, lien, claim or encumbrance that must be taken into account. Once all the rights and claims are clearly determined, a title product may be issued.

Title insurance services are designed to afford homeowners, lenders, and others protection from adverse title claims or risks. The financial assurance offered by these title companies, both in satisfying any valid claims and in defraying any attacks on the title, is the key aspect of title protection. This process also helps ensure that all parties have a clear understanding of their interests before the transaction is consummated. In this way, potential title claims can be resolved before financial losses are incurred.

WHAT'S ESCROW?

The dictionary defines Escrow as "The deposit of deed, bond, monies, contract or other written agreements with a third person to be delivered or used only upon performance or fulfillment of set conditions." More simply, Escrow may be defined as a stakeholder.

In practice, Escrow includes all of the services of a person skilled in the performance of the many details required to quickly and safely close your real estate transaction. The Seller's title is protected, held in safekeeping until all terms are complete. The Buyers may deposit funds, secure in the knowledge that they will be held in trust until the transfer of the property.

A real estate transaction requires time…time to perform the details of a title search, to prepare documents and obtain financing. During this period, the parties should be protected with a written contract containing all the terms and conditions of the sale.

Escrow provides one central place where all funds and documents may be deposited. Here they can be collected and disbursed only when all conditions of the contract are met.

Escrow is an independent third party who can perform these services impartially, protecting both Buyer and Seller, and acting on their written instructions in dealing with lenders, attorneys, brokers, agents, and any other parties involved in the transfer of the property.

The Escrow Officer is responsible for the final settlement between the Buyer and Seller, the recording of the required documents, the payoff of the existing liens or mortgages, and the proration of real property taxes, lease rents, maintenance fees, and any other property expenses to assure an accurate and complete closing.

Finally, escrow provides a lasting record of the transaction that will be available in the future (up to seven years after the date of recording) to establish the terms and conditions of the transaction.

Joseph & Jodi Hogin, Brokers of ERA Pacific Properties Maui, Hawaii

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