Do you like to binge all the real estate reality tv shows? Ever heard the word escrow and wondered what it means? Escrow is not commonly used here in Canada like it is in the United States. But there are situations where it might be used in a real estate transaction here in the north.
So what is escrow? Simply put, it is a legal arrangement in which a third party temporarily holds money or property until a particular condition has been met. So what does this mean? The government registration system for registering a new owner to a home closes at 5 PM. But if you read the agreement of purchase and sale, the contract typically used in Ontario gives everyone until 6 PM to close. In comes escrow. If the lawyers on either side have sent over all the required documents and funds before 6 PM then the deal can close in Escrow. When closing in escrow the registration usually will occur the next day. This is a great way for sellers and buyers to get key without having to wait. This is why as realtors we always recommend closing on a Thursday rather than a Friday.