An escrow is an arrangement in which a neutral third party, in Arizona a Title Company, holds legal documents from the buyer, the seller and the lender, and funds on behalf of a buyer and seller, and distributes the funds according the buyer and seller s instructions via a purchase contract.
People buying and selling real estate open an escrow for their protection.
Both rely on the title company to carry out faithfully their mutually consistent instructions relating to the transaction and to advise them if any of their instructions are not consistent or cannot be carried out. An escrow is important in that both can move forward separately but simultaneously in providing inspections, reports, loan commitments and funds, deeds and many other items, using the title company as the central depositing entity. If the instructions from all parties to an escrow are clearly drafted, fully detailed and mutually consistent, the title company can take many actions on their behalf without further consultation. This saves time and facilitates the closing transaction. The method by which the title company is to receive and hold the purchase price to be paid by the buyer.