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Glossary

Common Escrow Terms

Escrow

A financial arrangement where a neutral third party holds funds and documents on behalf of two parties involved in a transaction until all conditions are met.

Escrow Instructions

A written agreement that outlines the conditions and requirements for the escrow, including the responsibilities of each party.

Earnest Money Deposit

A deposit made by the buyer to show their commitment to the transaction, typically held in escrow.

Due Diligence

The process of conducting research and investigations to verify the accuracy of information provided in the transaction.

Deed

A legal document that transfers ownership of a property from the seller to the buyer. Commonly used in various legal contexts, including real estate transactions, property transfers, and the creation of certain types of contracts.

Disbursement

The act of releasing funds from escrow to the appropriate parties after the escrow conditions are met.

Holdback

A portion of the purchase price held in escrow for a specific purpose, such as repairs or improvements.

Prorations

The division of expenses such as property taxes, insurance, and interest between the buyer and seller, based on the closing date.