Webster's defines "escrow" as follows: "A deed, a bond or a piece of property held in trust by a third party to be turned over to the grantee only upon the fulfillment of a condition."
You as the Buyer (grantee) have made an agreement with the Seller (grantor) to purchase a piece of property. The title to the property will be turned over to you when certain conditions are met. These conditions include payment of the purchase price, and other things clearly spelled out in the contract to buy.
The "third party" in the escrow is called the "Escrow Agent". It is not you, and not the seller. It is a mutually agreed upon "other". It can be an attorney, a para-legal service, a title company or a company that has as its sole business the activities of escrow. Sometimes it is a real estate company or even an insurance company. The job is an important one and the escrow agent should be chosen with care.
Here is a basic outline of the steps that take you from the "opening of escrow" to the "closing of escrow":
Opening Escrow - Copies of the signed sale agreement and Earnest Money check are given to the Escrow Agent. The Ernest Money check is deposited (cashed) into the trust account of the Escrow Agent.
Title Search - Seller provides copies of title documents to Escrow Agent. Escrow Agent uses these documents to have a search of the Title done. If title is "good" the transaction proceeds.
Other contingencies are met within pre-determined timelines. These may include things such as a review of survey, CC & R's, house inspection, verification of inventory.
Seller and Buyer provide their names and addresses to the Escrow Agent so that transfer documents can be created.
Transfer documents are created, and sent to the Seller for signature. If the Buyer needs to sign (some types of transfer require this, others don't) then the documents are sent along to the Buyer for signature. The transfer documents are then returned, fully executed, to the Escrow Agent.
Brokers for Buyer and Seller create a closing statement for each party and submit them to the Escrow Agent for use at closing.
Buyer's will show balance of purchase price (or down payment) due to close plus any other agreed upon fees, pro-rations, etc. The final number will be what the Buyer needs to send along to the Escrow Agent to close.
Seller's closing statement will show the price, less Broker fees, plus any pro-rations (owed by Buyer to Seller) for property taxes, etc. as noted above. The final number net the Seller will receive.
Buyer sends balance of purchase price and any other agreed upon fees (for instance pro-rations for property taxes or homeowner's fees) to the Escrow Agent's Trust Account.
Closing Escrow - on the agreed upon date for completion of the sale, the Escrow Agent registers the transfer on behalf of the Buyer; sends the Seller his/her net proceeds and also sends the Brokers their fees. Buyer will receive back the stamped original transfer document from government within a few weeks time. Meanwhile, copies of the document lodged at the registry (along with a receipt for same) are a guarantee of your status as the new owner.
Voila! A "Closed Escrow." Congratulations - you now own property in Belize!