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Escrow Glossary
Essential Terms for Buyers, Sellers, and Investors: A plain-English guide to escrow terminology for real estate closings, business transfers, high-value holdings, 1031 exchange coordination, and digital asset transactions.
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Showing all 76 terms.
Categories
A
Acceptance
Acceptance — A buyer or seller's written agreement to the terms of an offer, counteroffer, amendment, or escrow instruction.
Addendum
Addendum — A written addition to a purchase agreement or escrow instruction that changes or clarifies the original terms.
Amendment
Amendment — A written change to escrow instructions or transaction terms after the original documents have been signed.
Appraisal
Appraisal — An opinion of property value, usually prepared for a lender before loan approval and closing.
Assignment of Contract
Assignment of Contract — A transfer of one party's rights under a contract to another party, often requiring escrow documentation and party approval.
Authorization to Disburse
Authorization to Disburse — Written permission for escrow to release funds once the required conditions have been satisfied.
B
Beneficiary Demand
Beneficiary Demand — A payoff statement from a lender or lienholder showing the amount required to release a deed of trust or other secured interest.
Bill of Sale
Bill of Sale — A document used to transfer ownership of personal property included in a sale, such as business assets, equipment, or fixtures.
Broker Commission Instructions
Broker Commission Instructions — Instructions telling escrow how real estate broker commissions should be paid at closing.
Business Escrow
Business Escrow — An escrow used for the sale or transfer of a business, business assets, liquor license, inventory, leasehold interest, or related property.
Buyer
Buyer — The party acquiring property, business assets, digital assets, or another item of value through the escrow transaction.
Buyer Estimated Closing Statement
Buyer Estimated Closing Statement — A preliminary statement showing the buyer's expected deposits, credits, charges, and funds needed to close.
C
Cash to Close
Cash to Close — The amount a buyer must deliver before closing after credits, deposits, loan funds, and closing costs are calculated.
Certificate of Trust
Certificate of Trust — A document used to confirm trust authority without disclosing every private term of the trust agreement.
Clear to Close
Clear to Close — A lender or closing-side signal that required loan conditions have been satisfied and the file can move toward signing or funding.
Close of Escrow
Close of Escrow — The point when escrow conditions have been met, funds are disbursed, documents are recorded or delivered, and the transaction is complete.
Closing Disclosure
Closing Disclosure — A consumer mortgage closing form that itemizes loan terms, closing costs, credits, debits, and cash needed to close.
Closing Statement
Closing Statement — A statement prepared by escrow showing the final debits, credits, prorations, payoffs, and disbursements for a party.
Commission Disbursement
Commission Disbursement — Payment of broker compensation through escrow according to written commission instructions and closing conditions.
Contingency
Contingency — A condition that must be satisfied or removed before a party is obligated to proceed with the transaction.
Conveyance
Conveyance — The legal transfer of ownership or interest in property from one party to another.
Crypto Escrow
Crypto Escrow — An escrow structure designed to help coordinate the transfer, custody, verification, and release of cryptocurrency or digital assets.
D
Deed
Deed — A legal document used to transfer ownership of real property from one party to another.
Deed of Trust
Deed of Trust — A recorded security instrument that gives a lender an interest in real property until the related loan is repaid.
Deposit
Deposit — Money delivered into escrow by a buyer or party to show commitment and fund part of the transaction.
Disbursement
Disbursement — The release of funds from escrow according to written instructions after required conditions are satisfied.
Due Diligence Period
Due Diligence Period — The review window when a buyer may inspect property, documents, title, financing, business records, or other transaction details.
E
Earnest Money Deposit
Earnest Money Deposit — A buyer's good-faith deposit held by escrow or another authorized holder and usually credited toward the purchase at closing.
Escrow
Escrow — A neutral process where funds, documents, or assets are held and released only when written conditions are met.
Escrow Account
Escrow Account — A trust or holding account used to receive and safeguard transaction funds until they can be disbursed under instructions.
Escrow Agent
Escrow Agent — The neutral party authorized to hold funds, documents, or assets and carry out written escrow instructions.
Escrow Cancellation
Escrow Cancellation — The process of ending an escrow before closing, usually requiring written instructions about deposits, fees, and file disposition.
Escrow Fee
Escrow Fee — The fee charged for escrow services, coordination, document handling, fund control, and closing administration.
Escrow Holder
Escrow Holder — Another term for the neutral escrow company or officer holding funds and documents under written instructions.
Escrow Instructions
Escrow Instructions — Written directions signed by the parties that tell escrow what must happen before funds, documents, or assets can be released.
Escrow Officer
Escrow Officer — The escrow professional who coordinates documents, instructions, funds, closing statements, and communication between authorized parties.
Exchange Accommodation
Exchange Accommodation — Escrow support for a 1031 exchange transaction, coordinated with the qualified intermediary and exchange documents.
F
FIRPTA
FIRPTA — A federal tax withholding regime that can apply when a foreign person sells U.S. real property interests.
Funding
Funding — The delivery of buyer funds, loan proceeds, or other required money into escrow before closing.
G
Grant Deed
Grant Deed — A deed commonly used in California to transfer real property ownership from a grantor to a grantee.
H
Hazard Insurance
Hazard Insurance — Property insurance that may be required by a lender before closing and funding a real estate transaction.
Holdback
Holdback — Funds retained in escrow after closing to address agreed repairs, missing documents, post-closing obligations, or unresolved conditions.
I
Impound Account
Impound Account — A lender-managed account used to collect and pay recurring property taxes, insurance, or similar charges with mortgage payments.
Independent Escrow Company
Independent Escrow Company — An escrow company that is independent from the parties and handles transactions under licensing, regulation, and written instructions.
J
Joint Escrow Instructions
Joint Escrow Instructions — Instructions signed by both buyer and seller that describe the mutual conditions for closing escrow.
L
Lien
Lien — A legal claim against property that may need to be paid, released, subordinated, or addressed before closing.
Loan Documents
Loan Documents — The lender's documents that a borrower signs before loan funding and closing.
Loan Payoff
Loan Payoff — The amount needed to fully satisfy an existing loan so the lien can be released at or after closing.
Loan Proceeds
Loan Proceeds — Funds delivered by a lender into escrow after borrower signing, lender review, and funding authorization.
N
Neutral Third Party
Neutral Third Party — A party that does not represent buyer or seller and acts only according to signed instructions and applicable requirements.
Notice of Default
Notice of Default — A recorded notice that a borrower is in default under a deed of trust, often requiring careful payoff or title handling.
O
Opening Escrow
Opening Escrow — The start of the escrow process, usually after a signed agreement and delivery of initial instructions or deposit.
P
Payoff Demand
Payoff Demand — A written statement from a lender or lienholder listing the amount required to pay off an obligation through escrow.
Preliminary Change of Ownership Report
Preliminary Change of Ownership Report — A California county form often submitted with a deed to report ownership transfer information.
Preliminary Title Report
Preliminary Title Report — A title company report showing current ownership, liens, exceptions, easements, and other matters affecting title.
Proration
Proration — A split of recurring costs or credits, such as taxes, rent, HOA dues, or assessments, based on the closing date.
Purchase Agreement
Purchase Agreement — The contract that establishes the transaction terms escrow will use to prepare instructions and coordinate closing.
Q
Qualified Intermediary
Qualified Intermediary — The exchange professional who holds exchange proceeds and helps structure a 1031 exchange outside the taxpayer's control.
R
Recording
Recording — The submission and acceptance of documents by the county recorder, often marking completion of a real estate transfer.
Release of Funds
Release of Funds — Escrow's delivery of held money to the authorized party after the conditions for release have been met.
Rescission
Rescission — The cancellation or undoing of a transaction or agreement, typically requiring written authority and party coordination.
S
Seller
Seller — The party transferring property, business assets, digital assets, or another item of value through escrow.
Seller Estimated Closing Statement
Seller Estimated Closing Statement — A preliminary statement showing the seller's expected credits, charges, payoffs, commissions, and net proceeds.
Seller Proceeds
Seller Proceeds — The amount due to the seller after payoffs, commissions, escrow charges, prorations, and other closing costs are deducted.
Settlement Statement
Settlement Statement — A closing statement showing the transaction's financial details, often including buyer and seller debits, credits, and disbursements.
Short Sale Escrow
Short Sale Escrow — An escrow involving lender approval to sell property for less than the amount owed on the existing loan.
Signing Appointment
Signing Appointment — The meeting or remote process where parties sign required escrow, title, loan, and transfer documents.
Source of Funds
Source of Funds — Information or documentation showing where money delivered to escrow came from when review is required.
Statement of Information
Statement of Information — A form used by title companies to help distinguish a party from others with similar names and clear title issues.
Supplemental Tax Bill
Supplemental Tax Bill — A property tax bill that may be issued after a change in ownership or reassessment and is separate from regular tax bills.
T
Title Insurance
Title Insurance — Insurance that protects against covered title defects, liens, or ownership issues discovered after closing.
Trust Account
Trust Account — An account used to hold client or transaction funds separately from operating funds under applicable escrow rules.
U
Unilateral Escrow Instructions
Unilateral Escrow Instructions — Instructions signed by one side of a transaction, often used with separate buyer and seller instructions in some closings.
V
Vesting
Vesting — The way title ownership is held, such as by an individual, trust, entity, joint tenants, or tenants in common.
W
Wire Confirmation
Wire Confirmation — Verification that a wire transfer has been sent, received, or matched to the correct escrow file and instructions.
Wire Fraud Prevention
Wire Fraud Prevention — Procedures used to reduce the risk of fraudulent wiring instructions, impersonation, and misdirected escrow funds.
This glossary is general educational information only. Escrow requirements can vary by transaction type, written instructions, lender requirements, title conditions, and applicable law. Parties should consult their own legal, tax, financial, and real estate advisors before acting.
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