First, a little about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is hired to assure your house closes on time and the money exchanging part of closing goes smoothly. A house is said to be in escrow when in the closing transaction, payment is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. For example, in an Internet transaction, PayPal is the neutral third party that holds the buyer's payment, and then hands over the money to the seller.
The escrow holder is careful to assure that all terms and conditions of the seller's and buyer's agreement are completed prior to the sale being finalized. This includes receiving payments and documents, signing required forms, and seeking out the release documents for any loans or liens that have been cleared with the transaction, assuring you have a clear title to your house before the asking price is fully paid.
The documents the escrow agent may obtain include:
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
Closing on the property happens when the steps of the escrow are finished. All debts and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). The property's title goes to you and title insurance is issued per the steps of your particular escrow agreement.
The escrow agent gets a payment when the closing is complete. You'll know when it's time to submit the form of payment.