In this article, we will be answering some of the most common questions about escrow and escrow services. At EQ:IQ, we pride ourselves on providing comprehensive corporate, trust and tax services to businesses and individuals across the UK. Over the last 15 years we have amassed extensive experience and expertise. Our dedicated team of Chartered Tax Advisors, STEP Practitioners and Lawyers try to make themselves available to answer any questions or queries you may have – starting with this article.
What Is Escrow? What Are Escrow Services?
Escrow is a contractual financial arrangement between an individual and a third party. The third party, known as an escrow agent, will hold money or an asset on your behalf. The escrow agent can also carry our transactions, as per the conditions outlined in the legally binding contract.
The escrow services provided by the agent are typically overseen by a licensed company or regulatory body. Operating both financially and legally on your behalf means that these are highly professional and confidential services, within which trust, confidence and reliability are emphasised throughout.
How Does Escrow Work? How Do Escrow Services Work?
Escrow is used for all kinds of large-scale transactions. This includes:
- Paying taxes.
- Paying insurance
- Paying for a house
As escrow is used for many kinds of payments, and so is relevant to a diverse range of businesses and sectors, escrow services are similarly expansive. The kind that you require, and the timescale that you require them for, will vary according to your individual circumstances and needs.
How Does Escrow Work On A Mortgage?
Real estate escrow is one of the most common applications of the service. It is incredibly useful when buying or selling property, as it ensures that the transaction is safe, secure and legally binding.
Real estate escrow is relevant for both the initial purchase and the ongoing mortgage repayments. It can be best broken down into several steps:
- Two parties agree on a sale.
- An escrow agent receives a copy of the agreement.
- The buyer transfers the agent earnest money.
- The seller completes any agreed-upon escrow conditions.
- Once the conditions have been fulfilled, the full amount will be paid to the seller.
The escrow agent handles the money between the buyer and the seller. They also handle other relevant transactions, such as their fee and real estate commission.
What Is Earnest Money?
Earnest money is a deposit, but more importantly, it is a sign of good faith. It demonstrates that you intend to complete the purchase, and that you are financially capable of doing so. This is why many people choose to engage escrow services when buying or selling a house as it ensures that you won’t lose money. If the buyer no longer wishes to proceed with the engagement, the earnest money is typically forfeited to the seller.
What Are Escrow Conditions?
Once the seller has transferred the earnest money, the property is “in escrow” and the agreement cannot proceed until the escrow conditions have been fulfilled. Escrow conditions are incredibly common, and a means of tying up any loose ends and getting the best version of the property. Examples of escrow conditions include: ensuring that the building passes a safety inspection and ensuring that certain repairs have been completed.
Is Escrow Good Or Bad?
As with most things, escrow has both positives and negatives. In many cases, escrow is unavoidable – unless you are able to make a significant down payment. Luckily, the benefits of escrow far outweigh the negatives: it safeguards your money, it establishes automatic payments and it prevents unanticipated costs and fees from arising. It also means that someone else can handle the financial details for you, which is invaluable if you have other priorities that require your attention.
Who Uses Escrow Services?
Escrow services can be used by anyone! Whether you are looking for services for personal reasons or for business, they are a really effective means of guaranteeing your financial safety and security.
Escrow Services With EQ:IQ
If you require escrow services, then look no further than EQ:IQ. We are a CySEC licensed company, which means that our services are overseen and approved by a wider public supervisory body. This means that you can be confident in the quality of our services, and in the competence of our team. We are committed to ensuring a smooth, safe and successful transaction, every time.
For more information about our escrow services, or about our other financial services, then please don’t hesitate to get in touch. A member of our friendly, customer focused team will be more than happy to address any queries and advise you as needed. Contact us today by completing an online form – we can’t wait to hear from you.
And if you’re interested in reading more informative articles about finance, then be sure to take a look at our previous articles.