In the context of home buying, escrow refers to a third-party holding of funds or documents on behalf of the two primary parties involved in a transaction—usually the buyer and the seller. This process helps ensure that everyone fulfills their contractual obligations before the sale is finalized. Escrow is held with the seller’s attorney.

Here's how escrow commonly works in a home purchase:

1. Earnest Money Deposit: After a buyer makes an offer on a home and the seller accepts, the buyer often puts down an "earnest money" deposit to demonstrate their commitment to purchasing the property. This money is typically held in an escrow account managed by an escrow agent, often a title company or other neutral third party.

2. Inspections and Appraisals: The escrow period allows time for necessary inspections and appraisals to be conducted on the property. If any issues arise, the buyer and seller may renegotiate terms or terminate the contract.

3. Loan Approval: If the buyer is financing the property, their lender will be completing its underwriting process and approving the loan during the escrow period. The lender may require certain conditions to be met before funds are released.

4. Document Safekeeping: The escrow agent will also typically hold onto any important documents, such as the deed to the property, to ensure they are transferred properly at the time of sale.

5. Closing Costs and Final Payments: During the close of escrow, the buyer will typically send their down payment and closing costs to the escrow account. The escrow agent ensures that all funds are distributed appropriately—paying off any existing mortgages on the property, paying service providers, and transferring the remaining funds to the seller.

6. Ownership Transfer: Once all conditions are met and all parties have fulfilled their obligations, the escrow agent will oversee the signing of final paperwork. The deed is recorded, transferring ownership from the seller to the buyer.

7. Closing of Escrow: After everything is complete, the escrow account is closed, and the remaining funds are disbursed accordingly.

The escrow process protects all parties involved by ensuring that no funds or property will change hands until all conditions of the sale have been met. It adds an extra layer of security and peace of mind to a complex and high-stakes transaction.

The state of New Jersey is an “actual damage” state, and that means the seller can’t simply take your deposit. They have to first prove there is a default, then quantify the damages. It can be a long process, which is why this is often solved in negotiations before it goes to court.

Fortunately, a home buyer has certain remedies available if it is proved that a seller has wrongfully failed or refuses to perform the obligations under a contract, including: termination of the contract and return of the deposit, plus payment of reasonable expenses, court-ordered completion of the home sale and money damages for breach of contract

The review process is when the accepted bid in contract form is delivered to both the seller’s and buyer’s attorneys. The clock starts counting down, and unless the buyer’s attorney rejects the contract (which would then require some back and forth), the deal will be under contract in 3 business days.

While cautious optimism is fine during the review period, but until you are truly under contract the house is still technically on the market, and on all the retail sites. It’s why you want to move things along as quickly as you can.

Here's how we can help: Getting to the contract phase is no time to relax. We believe we’re only halfway there—and will not rest until the contract is signed. We can select a local attorney who knows the players and how to get the deal done.  We will stay on top of your attorney, because in a busy market, they are also busy (we’re your squeaky wheel!)We can ask the attorneys to put agents on copy so we can track and move things along

And if you are wondering "Is there value in using a local attorney with whom your agent has a relationship?" Yes. Local attorneys know the area agents and how to get the deal done. They are also well versed in the local laws (if you’re out of state), which can be crucial.

Tax proration refers to the allocation or dividing of certain money items in the settlement sheet for the property transfer. Calculations are performed at the closing to determine what amount of property taxes each party (seller and buyer) is supposed to pay for that tax year.

The town does have the opportunity to reassess the value of the property after a sale to adjust for current market value, and may typically assess it at 80-90% of that market value, but are not bound to that range.