Escrow is a legal financial arrangement which involves a third party who temporarily holds large sums of money or property until conditions and contingencies are met, as in the fulfillment of a purchase agreement for property. The escrow account is fundamentally a temporary holding account managed by the escrow holder. The escrow holder needs to be a neutral third party that holds funds and related documentation in a secure manner while the parties work through the details of the real estate transaction.

Escrow is extensively used in real estate transactions to protect the buyer, the seller and the lender throughout the home purchasing process. In the case of the mortgage company, an escrow account will hold funds for taxes and homeowner’s insurance.

The purpose of an escrow account is to provide safe transferal of large sums of money while finalizing the details of the sale, based upon compliance with the latest security and privacy standards. By minimizing risks during real estate transactions, the escrow/settlement process protects the buyer, seller and lender.

Once a written sale agreement is reached, seller, seller’s agent, buyer or buyer’s agent will open an escrow account. The escrow holder will be provided with the terms of the sale and the terms and tasks of the sale in order for the agreement to be satisfied. These may include:

  • Coordinating communications among all parties in the transaction
  • Preparing written escrow instructions
  • Requesting a preliminary report or commitment
  • Requesting a statement of identity (information) from the buyer or seller as needed
  • Ordering demands or beneficiary statements
  • Receiving bills from home warranty companies, as well as pest, roof, home and other inspection companies
  • Preparing or securing the deed or other recordable documents
  • Complying with lender’s requirements
  • Prorating taxes, interest, insurance and rents
  • Receiving purchase funds required for closing
  • Coordinating recording of deeds and any other necessary documents
  • Closing escrow when all the instructions of the buyer, seller and lender have been carried out
  • Disbursing funds as authorized, including charges for title insurance, recording fees, real estate commissions and loan payoffs
  • Preparing final statements for the parties, which account for the disposition of all funds deposited in escrow


If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

Counsellors Title Agency,, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.


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